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Post Brexit predictions look to be a farce after August is confirmed as a successful month in the construction industry

“Hope is being able to see that there is light despite all of the darkness”

 

Before the referendum decision was confirmed there was widespread panic of what leaving the EU could mean for many of us, with 17.4 million British citizens voting to leave the European Union, killing the UK’s membership of the biggest and most prosperous trading bloc in the world (and one that has significantly enhanced our prosperity over the past four decades). On Friday the 24th of June 2016, the decision was confirmed to leave, which left question marks hanging over the very survival of the United Kingdom, I mean sure we knew for weeks that it was going to be a tight vote, but I don’t think any of us fully expected that result, not deep down anyway.

 

In just 24 hours, Cameron was out of a job, the course of history had been altered and the country was in turmoil and all the while Britain looked on in dismay, and tried to recover from the magnitude nine shock delivered by the result, what had Britain done? But in truth, I don’t think Britain knew what they had done themselves. I sat down to have coffee with a friend later that afternoon who said she regretted her choice and if she could, she would “go back to the Polling Station and vote to stay because this morning reality is kicking in!” Never mind reality- I was about to kick her myself.

 

That day was a very surreal day for me. I couldn’t help but worry what this meant for me, for my family. The words of Andy Hill rang like an alarm in my head. The chief executive at ‘Housebuilders’ predicted that a Brexit would have severe consequences for the property industry and economy in general. The interview had Hill shed light on the demand for housing currently in the UK currently, with over 1million new homes needed before 2020.  He feared that “without the investment coming into the UK at current levels and demand diminishing significantly, developers would likely pull away from building more homes and this figure will be incredibly difficult to meet.”  All day I read through pages and pages of articles and hastily searched google for some positive insight to what Brexit would mean for the construction economy, I was the google symptom searcher who had a tickly cough, looked up their symptoms and suddenly its ‘six degrees of cancer.’ The more I clicked the worse it got. I tried to reassure myself it was scaremongering however most of these articles were singing from the same Hymm sheet- that Brexit could possibly lead to another recession.

 

For my first blog post I decided to revisit this, I started this blog post on Monday so my findings were either going to have me starting my week off on a good foot, or adding a little bit of ‘Irish’ to my coffee that morning, luckily an extra sugar was all I needed. A mere two months on and the outcome for the construction industry looks certainly a little brighter, albeit there is still cause for concern as figures show that UK construction shrank at its fastest pace since 2009 after the UK voted to Leave the EU in June. However as noted at the time, the picture is still unclear around whether this direction is fixed for the coming months or is a short-term reaction and the aftershock of the UK’s referendum decision.

 

According to the latest figures from industry analysts Barbour ABI there certainly seems to be a glimmer of hope for the industry.  The report stated that Despite a dip in construction new orders, housebuilding contracts rose by 13 per cent year-on-year to £1.7 billion in August as the "robust" sector continued to challenge the negative Brexit predictions. According to the Economic & Construction Market Review, residential and infrastructure sector "kept the industry on a steady pace" in the eighth month of the year, delivering £3 billion of the £5.5 billion total construction contracts awarded. Michael Dall, lead economist at Barbour ABI, commented that the sector is yet to experience the forecasted post-Brexit effects. "The mixed results from the residential sector has still been robust enough to keep the industry in a position to potentially grow in the near and long-term future."  He added that “Developers are also keen to keep progressing with major projects, such as the £750 million Galloper offshore wind farm and the £150 million Greenwich Peninsula residential development commissioned this month alone, which in turn is helping to build confidence and provide a well needed boost across the industry.”

 

Persimmon, the biggest company in the sector supported these claims with their latest figures.  After dropping 37% on 24 June to £13.10, Persimmon shares have regained most of the loss and were the biggest risers in the FTSE 100 following its upbeat statement, rising almost 5% to £18.77 in early trading. Persimmon’s pre-tax profit rose 29% to £352m in the six months to the end of June as revenue rose 12% to 1.3bn. Housebuilders have boomed over the past few years supported by rising prices, economic growth and the government’s help-to-buy scheme. Finance director Mike Killoran said that after the traditionally quiet summer months Persimmon expected business to pick up in the autumn and that potential customers had their finances in place to buy. Killoran added: “Given the interest we are seeing on the sites from visitor traffic and people genuinely wanting to buy we can see no reason why we wouldn’t see that [autumn] seasonality continue. All the feedback we are getting from sites is that given the market we are in and the product we are offering … there is a great desire to buy.”

I was going to title this blog ‘Post Brexit predictions look to be a farce after August is confirmed as a successful month in the construction industry’ but my mother always taught me not to count my chickens before they hatch and it is still very much early days on what Brexit will mean for construction and home building in the Long-term. However, these latest figures should be enough for us all to have a little hope, if nothing else.

By: Aimee McSorley - Job Board Media - a.mcsorley@job-boardmedia.com