It’s still hard to discern what exactly the effect of Britain voting to leave the EU has been and what is likely to happen over the coming years due to Brexit. In particular, what impact will it have on those of us who are building new homes or improving existing properties?
While the pound took an almighty tumble the day after the result was declared – and has yet to recover – when you look at the longer term perspective it’s still trading well within its historic range. The economy as a whole continues to grow steadily and the outlook remains about as clear as it always has been — which is to say that no one really has a clue and that Brexit may end up having only a marginal impact.
In the short term, the falling pound matters. I have been pricing a house-load of building materials these past few months for my own self build, and it is now clear that a lot of exchange rate-fuelled price rises are in the pipeline. The UK runs a huge trade deficit in building materials — and even many of the homegrown products are made using imported materials.
A 10% fall in the value of the pound is bound to be reflected in price rises eventually. Many suppliers have held off putting rises through, not wanting to upset the buoyant British construction market, but now that the dust has partly settled, expect to see a lot of price increases in the 10-15% bracket during 2017.
Timber prices have, for instance, been remarkably stable over the past few years, but almost all of our construction-grade timber is sourced from abroad, and so it’s hard to see how it can’t be charged at a higher rate to compensate for the fall in the pound.
By and large, heavy materials like concrete, bricks and roof tiles are manufactured locally, and so price rises here will be more muted, but many of our more upmarket items are imported from the Continent. This was perhaps one of the benefits of Brexit. Our currency being worth 10% less than it was last year could encourage the use of homegrown materials and make imports less attractive.
But markets are rather more complex than this, and there has been a tendency over the previous years for many industries to become highly international in their outlook, which means that your bricks are as likely to come from Belgium as Yorkshire. Manufacturers may simply decide to put all bricks up by around 5% rather than discriminate against the ones made on the other side of the Channel.
How will Self Builders React?
But what of the wider implications of Brexit? We will surely survive five or 10% inflation on building costs, if it remains a one-off. But will we, the consumers, still have the confidence to embark on major building projects given all the uncertainties?
The problem with even discussing this is that the vote has polarised opinion in an unprecedented way. It seems that most of the leavers are bullish about our prospects now we’re freed from the yoke of a burdensome EU, while the remainers can see no good coming from any of this. While we are all entitled to our opinions, it’s far from clear whether we are set to prosper or decline. Only time will be the judge of that and it may well take many years before we can reach some sort of a conclusion.
Will the EU even exist in 10 years’ time? Will the UK have broken up? Will we see more populist governments? In short, will the world be a better place or will it still be reeling from the aftershocks of the financial mayhem in 2008 that seems to have started all this?
We just don’t know, and anyone who says they do is lying. The world of self build is not immune from all of this, but it has proven remarkably resilient over the years, and it is unlikely to stop functioning if we hit storms up ahead. The desire to create your own space is pretty basic and many of us will continue to dream of doing it, whether we are making loads of money or getting by on a shoestring. We will build our homes according to the cloth we have cut.