News: 1 July 2016Britain Leaves - Housing Need Remains

The settlement that the UK negotiates with the EU will have a significant bearing on what happens to immigration from EU countries as well to the amount of funds received by the regions for their growth agenda, therefore the impact of Brexit on local housing demand will not be fully understood for some time. Factors include the UK’s standing within the global economy, availability of EU Structural Funding (or alternative), as well as details of the UK Government’s Policy Response, including any limits and measures which may be imposed on the movement of people. Until these points become clear, local authorities and the housebuilding industry must work on the basis of business as usual – particularly given the long standing crisis in the housing market and the housing shortfall that still remains.

Below, our Research team highlight the possible effects and considerations for both immigration and economic growth at this stage, as speculation continues on whether the UK will take part in the European single market, and therefore most likely continue with freedom of movement.

Effect on Population – immigration

A number of senior Tories are talking up the possibility of joining the single market, thereby avoiding trade tariffs – which will mean free movement of labour between EU and UK. Assuming the economy continues to grow, there would be no reason to think the current levels of immigration would reduce. Whereas a settlement that puts the UK out of a European single market is more likely to dampen growth and end free movement – reducing immigration from the EU.

However, while a significant proportion of migration to and from the UK is associated with the EU, non-EU flow has historically been much higher, so as this is unlikely to significantly change, the need for homes for these people will still remain.

Those from the EU do account for the majority of work-related migration, but with most of this for high-skilled work, the places where the labour market is strongest and where the highly skilled jobs are located will still need to plan for this growth. It will be the low skilled workers who would be most vulnerable to changes to free movement of labour, but the numbers of these migrants are relatively small.

James Donagh, Director summarises: “In short, the UK in the single market will put upward pressure on the household projections and housing numbers, whereas the UK out of the single market could bear that pressure downwards. However in the context of overall immigration, the net migration assumption of the latest UK population projection (185,000 per annum in the context of a recent trend of 330,000 per annum) looks plausible if not conservative.”


Implications for Economic Growth

Local economic growth ambitions are one driver of future housing demand, and economists are busy recasting economic forecasts to account for the strengths and vulnerabilities of particular industries.

Simon Macklen, Director, highlights the significant funds that may be at risk for the regions:

“Questions remain over the future of EU Structural Funds, which are distributed through LEPs and through devolution agreements with combined authorities (for example Greater Manchester), and are fundamental to the UK Governments regional growth agenda (including the Northern Powerhouse). The North West, South West and Wales are the biggest recipients of Structural Funds, with significant allocations through the period to 2020, and these regions will be pushing Government for greater clarity over the future safeguarding of these funds.”


There are many uncertainties at the present time over the future implications of Brexit to the housing market, and wider economy. However, as Simon concludes: “the significant need to plan for a greater supply of new homes remains, and it is clear that any curbs which may be placed on the movement of people will not reduce that need to any great extent.”

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Development Economics, Migration, Research, Brexit, European Union, Immigration, Housing Need