Sector insights for 2018: Housing
The housing sector is experiencing challenges and opportunities in equal measure in 2018, making it vital that professionals take the necessary steps to get ahead of the trends.
The housing industry has always been characterised by rapid evolution and changing trends, and 2018 is shaping up to be no different in that regard.
While the need for new homes to meet a growing population never changes, fortunes in the housing sector are constantly shifting as government policy is revised, economic forecasts affect industry sentiments, and house prices fluctuate up and down. As such, it can make for an unpredictable market, with many different factors to keep under consideration.
With the months ahead likely to be marked by even more change, it's vital for housing sector professionals to keep abreast of all of these trends to the best of their ability, and make sure they are investing in learning and development to stay one step ahead.
Positive construction trends...
A healthy construction pipeline is the lifeblood of the housing market, and in this respect, it appears likely that 2018 may offer a number of promising opportunities.
Data from the National House Building Council has shown that construction firms registered plans to start 160,606 new homes in 2017, up six per cent compared to 2016, and representing the highest number since the start of the financial crisis in 2007. Completions, meanwhile, rose four percent to 147,278, the most since 2008.
Although this is still lower than the government's annual construction target of 300,000 new homes, it is expected that housebuilding activity will continue to trend upwards in 2018, in line with the ongoing recovery of the economy.
...despite a backdrop of weak demand
However, it's worth remembering that the positive sentiments from the construction sector are currently being tempered by other industry reports highlighting weak demand among buyers for the houses that are being built.
Data from the Royal Institution of Chartered Surveyors has shown that the net balance for new buyer enquiries has been hovering in negative territory for around a year, while Halifax figures on house prices suggest the rate of growth on this metric is also slowing down.
Recent stamp duty increases could be playing a role in this, but the ongoing uncertainty surrounding the UK's exit from the European Union is also thought to be dampening the market. As such, those in the industry will need to keep a close eye on the latest Brexit developments to get a better sense of which way these trends may go in future.
Growing calls for more social housing
One area of the housing market that is still seeing considerable demand is the social housing sector, with the availability of affordable homes for social rent likely to remain a key topic of political discussion in 2018.
According to official statistics, the number of social homes available in England dropped by 11 per cent over the last year to a record low, with nearly 40,000 fewer social houses being rented in 2016-17 than the year before. This continued an ongoing downward trend in the number of social houses since monitoring began in 2007-08.
With waiting lists for these homes still growing, there could be a significant opportunity for housing providers to fulfil an important need by moving to tackle this issue.
Government initiatives proving their worth?
2018 will be a year in which many of the moves taken by the government to bolster the performance of the housing market will be expected to demonstrate their value.
For example, the scrapping of stamp duty for all properties up to £300,000 bought by first-time buyers is expected to deliver savings of up to £5,000 in four out of five cases, thereby increasing demand; the help-to-buy scheme, meanwhile, has received another £10 billion funding injection to last until 2021, meaning many eyes will be focused on the results it delivers this year.
Industry professionals will also be keeping a close eye on potential interest rate changes, with a 0.25 per cent hike expected in late spring. This is unlikely to have a major market impact, but it will nevertheless prove to be an essential data point in forward-looking forecasts.
The importance of preparing for GDPR
One of the biggest changes affecting housing professionals this year is a new piece of legislation, the impact of which goes far beyond the housing sector. On May 25th 2018, the Europe-wide General Data Protection Regulation (GDPR) will come into effect, introducing stringent new consent rules on the storage and use of sensitive information, and harsh penalties for companies that fail to comply.
Though GDPR is not a housing-specific law, it will apply to all businesses holding personal data on EU citizens, and will remain in place even after Brexit. As such, it's vital that housing professionals do everything they can to get up to speed with the latest compliance requirements, as it's likely that regulators will be paying very close attention to this issue in 2018, and no organisation can afford to be caught out.