Relocation and Regeneration
Huge Boost for Regional Development
Real estate jobs are notoriously linked to the economy. When the economy falters, it is often the case that construction activity drops. So, with Brexit fervour reaching a new level of ludicrous recently (eight weeks of talks between the government and Labour have broken down with no resolution or compromise), we thought we’d look at how the house building sector has been affected.
Brexit – Not The Economic Brake It Was Supposed To BeDespite the Brexit impasse, UK PLC is moving ahead reasonably well. More jobs. 1.2 million more. Lower unemployment. The lowest unemployment rate since the early 1970s. Continued economic growth. Higher home prices. Higher wages. Inflation below target. Indeed, it is in almost complete contrast to what all the experts have told us to expect.
When it came to the UK residential market, it was feared that home buyers and property investors would flee the market. There was talk of a house price crash worse than that caused by the Global Financial Crisis. Some spoke of house prices as much as 30% lower within two years of a vote to leave the EU. Yet, since May 2016 the average house price in the UK has increased by 7.2% to more than £226,000.
Yes, there has been some hesitancy, but the apocalypse that was predicted has not come to pass. Why is this, particularly in residential real estate? Why is it that the market for property development jobs is still so competitive?
Long-Term Supply + Demand Imbalance Good For JobsThe long-term trends are super-positive for the UK’s residential market. Recent immigration statistics have shown that the number of immigrants from the EU is at the highest it has ever been. Net immigration into the UK remains well above 200,000 per year.
There is a shortfall of homes in the UK, which is becoming worse. The government has set a target of 300,000 new homes built per year by the mid-2020s. The National Housing Federation believes this is short of real need. In new research published in May 2019, it and Crisis (the charity for homeless people) says that the backlog of homes needed has reached 4 million. It believes that the UK needs to build 340,000 new homes every year from now through to 2031 to meet housing needs in the UK.
Demand for Real Estate Professionals In The RegionsThe EU referendum has certainly highlighted the difference between London and the regions in real estate. While the average London property price is still more than £240,000 above the average UK price, there is no doubt that Brexit has had a bigger effect on the London market than it has the regions.
While London’s average house price has fallen by 1.6% since the vote to leave the EU, other regions have been roaring:
In the West Midlands, the average house price has increased by 12.3% to £196,152
In the East Midlands, the average house price has increased by 12.7% to £190,199
In the North West, the average house price has increased by 10.8% to £163,758
In the East of England, the average house price has increased by 9.7% to £290,137
(Data from ONS UK House Price Index, April 2019)
Much of this shift in focus has been caused by relocation of businesses to regions such as the West Midlands, where costs are more affordable. Combined with regeneration schemes and development of infrastructure, local populations are booming. House prices are rising. Investors and homebuyers are buying. The number of real estate jobs are following these leads.
Should real estate professionals expand their horizons?Homebuyers and property investors have shifted their focus from London to the regions. They have adapted to the regionality of the UK economy. As businesses have relocated from London, so, too, have employees. Of course, London remains a global city and will always be in demand. Yet, businesses and people are no longer ignoring the regions.
Real Estate Jobs Further Than London
Largescale regeneration, expansion of transport, and upgrading of infrastructure suggest that there are likely to be an increasing number of exciting opportunities across all real estate disciplines in the regions. Particularly residential development. Population projections and the ongoing imbalance between supply and demand in residential suggests that residential is likely to be a growth market for real estate jobs for many years in the UK. Just don’t become fixated on London.
A Resilient Sector With Growth ForecastBrexit may have taken over all the headlines, but it may not be long before the housing crisis looms large again. It is, perhaps, the biggest issue facing the UK. People need homes. The challenge for the government will be to introduce market reforms that enable developers to build more homes. It will also need to tackle the skills shortage in the industry. UK residential property remains popular with investors, both domestic and overseas, and the huge imbalance between supply and demand is likely to drive investment flows. The market is resilient to
the Brexit storm (should it ever arrive). For professionals working in or transitioning into the sector, the shifting focus from London to the regions raises another interesting question: could regional salaries in real estate jobs start catching up with those paid in the capital?
For a confidential conversation about your career and the exciting market in property development jobs, contact us today.