So, let’s get Brexit out of the way. The property market is no different from any other market in being a simple equation of supply and demand (you really should have listened to your economics teacher!). So, in the short term, what might the promise of Brexit do to supply or demand? Well, on the supply side, it is hard to see that a great deal will change. Every government promises a flood of new building that is thwarted by building regulations, environmental concerns and perhaps a touch of NIMBYism. And let’s not forget the increased stamp duty that has buy-to-let investors and those buying at the higher end, reaching for their calculators. Will builders lose confidence in building homes? There seems limited evidence to support any material change in attitudes. Demand is a bit tougher to call. The Bank of England (BoE) has significantly reduced growth forecasts for the next two years and some financial analysts are putting the chance of a recession at a 50-50. A significant recession would clearly impact demand if unemployment rose or even if the threat of unemployment changed home buying attitudes. The BoE has already reduced base rates to a record 0.25% with the prospect of a further drop not far away. Many banks have responded with even cheaper mortgages to stimulate demand. So, the verdict on demand is… hard to call! A gentle softening of demand is my pick, but nothing material.
So, let’s get on to what really matters… The big issues affecting the property market in the decades to come. First of all, let’s talk demographics. If everyone seems a bit older at the supermarket these days, you’re not wrong! There is going to be a significant rise in 65+ category in the next 10 years and a dramatic rise in the 85+ category. According to research done by the Department of Work and Pensions, nearly one in five people currently in the UK will live to see their 100th birthday. So here’s some really easy extrapolations into property. If you own a bungalow now, pat yourself on the back. You own a rare asset with a guaranteed increase in demand. There will also be a surge in demand for quality homes suitable for later life (think everything from smaller gardens, close proximity to towns, adapted bathrooms/kitchens to sheltered living). In this area, those people that plan ahead will reap the rewards of a stress free transition.
So what other macro – trends will we see emerging? Well, unless you believe this government will solve the home shortage, there could be a lost generation in terms of home ownership. We’re likely to see more demand for homes with annexes for the wider family (either the children or the parents!). Properties will need to adjust to our more ’fluid’ lifestyles. This means lots of focus on the kitchen as the feeding, socialising and entertaining hub of the home. Also, watch for the maximum use of our occasional days of summer with continental style indoor/outdoor flow.
So, onto a trickier prediction. What wins in the demand stakes – town or country? The last 10 years have seen a net flow to towns as farming has become automated, towns more attractive, public transport less available and journey times longer and longer. All set to continue? Wait a minute – is technology riding to the rescue? Fast, ubiquitous broadband will eventually allow effective home working from anywhere, so for many people, the end of the tedious commute beckons. Also, why wait for that bus when your driverless car will soon be a mouse click away? So, technology in many ways brought people into towns and could now be helping spark a return to the country.
And our final macro factor is energy. The world is moving away from huge power stations processing coal, oil, gas or uranium to multiple source energy, often generated locally. Isn’t it strange how solar panels and wind turbines no longer look odd in the context of domestic property? But energy is not getting cheaper any time soon and could be due for a substantial spike upwards. So, limit what you use and generate it yourself. Remember that Energy Performance Certificate (EPC) that hides on the estate agent’s property description that you ignore? Well, it matters now! Homes with adverse EPC’s just don’t sell like they used to. So, replace that old boiler, insulate those walls and roof spaces, check out double (or even better triple) glazing and see what power generation options you might have. Zero footprint houses are being built today.
So, if Brexit is a bump in the road, the big hairpin bends are demographics, lifestyle changes, town/country tussle and energy. So, take your position on the big issues, think carefully about your short, medium and long term requirements and prepare for a fascinating decade ahead.
Sheree Foy is Principal and Property Consultant at Source Harrogate – The Property Finders.
www.sourceharrogate.co.uk firstname.lastname@example.org 01423 788759