The extent of the challenge Theresa May faces in tackling the housing crisis has been underlined by news that large housebuilders are stepping back from buying land because of the uncertainty caused by the Brexit vote.
The country’s new prime minister, who took office on Wednesday, pledged in a speech on Monday to boost housebuilding, warning that failure to deal with the “housing deficit” would price young people out of the market and increase the “divide between those who inherit wealth and those who don’t”.
However, it has emerged that a number of large housebuilders have put on hold or are reevaluating plans to expand their development pipelines.
David Thomas, chief executive of Barratt Developments, told Property Week that his firm would “reassess” its acquisition strategy in light of the uncertainty caused by the Brexit vote.
“We recognise that our land spend would be round about £1bn per year, and therefore it’s just sensible that we look to reassess that land spend and we also monitor the market.”
Holding off buying land
Barratt is not the only company to take a step back: one senior figure at a large agent said many of the major housebuilders were now holding off buying land.
“They will look at things but they won’t actually exchange,” the agent said. “I have heard of some of the smaller companies who have transacted, but not the big five.”
Another senior market source said housebuilders were worried about the current state of the market, particularly in London, which was “very quiet”.
“It’s a combination [of factors]: you have the stamp duty hike, which has taken a while to work through; you have the summer holidays, and you have Brexit. To some extent it was inevitable. Everybody is waiting.”
Berkeley Group chairman Tony Pidgley told Property Week that housebuilders were simply trying to take stock of the situation following the Brexit vote, which sparked a sell-off of shares in the sector and saw close to £9bn wiped of the market value of the biggest builders.
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May’s appointment would bring some much-needed stability to the market, he said.
“I think we were all trying to understand where we were, and without leadership, we had no idea where any of the markets were,” he said. “We need stability, we need political leadership, and I believe she’s got the credentials and the reputation to do that.”
A Home Builders Federation spokesman played down the impact of the vote on the market, saying reservation and sales figures following the referendum were looking “really positive”.
However, the spokesman conceded that housebuilders would hold off on land purchases. “If housebuilders have got to take a decision on land, they’ll take it and push ahead,” he said.
“Decisions which don’t have to be taken will be put off until they’ve got some more clarity”.