Two weeks ago I drove fifty miles though the Suffolk countryside and in village after village there were dozens of Leave placards and not a single Remain placard. I had a gut feeling that Leave would be victorious and yesterday afternoon I wrote a tweet that I did not post because I thought it was too pessimistic: “I think Leave might win. I fear many people feel sneered at & lied to by the political classes/elites. It’s their chance to say Up Yours.”
“Up Yours” indeed. When the dust settles it will be interesting to see how much of the vote was accounted for by dislike of the EU, and migration in particular, and how much of it was down to both austerity and the growing disconnect between establishment politicians and the people who are struggling under this government’s policies. If you look at the detailed results it is white working class areas where the Leave vote was highest. Just to take the Bs, over two thirds of voters in Barnsley, Bassetlaw, Blackpool, Bolsover and Boston voted to Leave. The Leave vote in these places appears to be significantly higher than in well-off rural areas. In retrospect , it will be seen to be completely daft for any government to ask the people for their support when it’s been attacking their living standards for the past five years.
“92 percent of housing association chief executives were for Remain, yet polls suggest that the overwhelming majority of their tenants were for Leave.”
But this disconnect between the well-off and the poor also extends to UK Housing. 92 percent of housing association chief executives polled by Inside Housing were for Remain, yet polls suggest that the overwhelming majority of their tenants were for Leave. Again, once a full analysis is carried out, it will be interesting to see how much of this is accounted for by non-EU issues. To what extent did social housing tenants feel angry about being excluded from decisions that affect them, whether it’s the “worst-ever” Housing Act or mergers and Regeneration schemes that are carried on without their input? When Ian Duncan Smith said last night that the council estates were turning out in unprecedented numbers he was derided for stereotyping, but perhaps he was onto something.
So what does it all mean for the future of housing? Throughout this campaign we have been assailed by claim and counter claim about the impact of a Brexit vote upon housing and the wider economy, so my headline answer is: “I’ve no idea!” Given the failure of the pollsters I think it would be a foolish person who tries to predict how housing will look ten years from now. However, here are just a few random musings on my part.
Overnight, shares in house-builders have nose-dived, but I can’t say feel much sympathy. Their shares were booming just a few weeks ago on the back of the government pumping unprecedented amounts of taxpayer money into their coffers, and yet they still refuse to build the homes that they should. If they now scale back their output then surely that suggests an interventionist role for public investment? Given that Osborne must now go does that mean a re-think on austerity? During the campaign the Chancellor foolishly trumpeted the prediction that house prices would be up to 18 percent lower than they might have been by 2018 if people voted Leave. If I was a social housing tenant or a priced-outer struggling to buy this might have tempted me to be a quitter. Private Eye satirised this with a cover showing David Cameron, saying “There could be a world war!”, and George Osborne replying, “Or even worse, house prices might fall!” But middle England, for whom rising house prices are like oxygen, appears to have ignored this warning and voted for Leave.
In the short term is anything significant likely to happen? Markets always react with a knee jerk but Johnson and Gove have been putting on their statesmen faces this morning and trying to calm them down. This afternoon the FTSE has recovered some ground. We don’t know what the UK’s exact status will be within Europe five years from now and there will be a great deal of uncertainty for the next few months. Exit will be at least two years away and migrants will continue to arrive, both from within and outside the EU. The pressures on the private rented sector will continue. Foreign buyers of London properties have been largely from outside the EU and with the fall in the pound those properties will be even cheaper, so demand will surely continue to boost house prices in London and the south east, although some are predicting London prices will fall. But the forecasts are all over the place and the Treasury’s prediction was that house prices would not fall in real terms, but that they would not go up by as much as predicted.
In the longer term, if an “Australian points’ scheme” is introduced it will presumably mean low-paid baristas and hotel staff from Eastern Europe will gradually be replaced by higher paid skilled workers but what impact will this have on the PRS and house prices? Will it mean fewer multi-occupied homes and a higher quality PRS offer for these new arrivals perhaps? Would that be an opportunity for housing providers? As for the construction industry, presumably skiiled construction workers will still be allowed in? The construction industry is calling for this to happen.
The bigger unkown impact will be upon the wider economy and interest rates. The Remain campaign predicted a big hit on the UK economy if we left, but the Leave campaign predicted a rosy future, free from the shackles of EU bureaucracy. But markets hate uncertainty and investment decisions, including lending to housing associations, will undoubtedly be impacted in the short term. If interest rates go up, Development and borrowing will be more expensive, but then again if house prices fall so will land prices so there could be some balancing out.
Politically, Brandon Lewis now has a very good excuse if his million homes target is missed, (which it would have been regardless of a Leave vote). The result will also increase the pressure for devolution. Scotland and Northen Ireland today look like very different countries from England and Wales. The United Kingdom is not united today.
So as for the future of housing, you can pay your money and take your choice. Whatever your feelings about the result, democracy has been done. Although the world has been up-ended, what is unlikely to change is the essential dysfunctional nature of our housing market. The next few months and years will be interesting.
(this post first appeared on Inside Housing on the 24th June 2016)