One last look back at 2015

The Christmas period was the perfect time to catch up with family and friends, enjoy the seasonal weather and enjoy some good food and drink (maybe a bit too much of the latter ones!). It is also a time to reflect. Kate and I often think about everything we are thankful for and 2015 was no different. I personally also reflect on property – for my own and for my job. The property industry in 2015 was pretty exciting and full of ups and downs. Maybe this is because 2012 – 2014 were fairly sedate or maybe simply because it was far my exciting. I’d like to think the later.

• 2015 clearly demonstrated that a lack of capacity and certain markets becoming too hot meant that the growth in the year was dampened off a little – particularly given the increasing cost base – a clear example being the halting of the redevelopment of the Harlequin shopping centre.
• 2015 was the year China entered the UK big style. Numerous projects including a £6bn investment in the Hinkley nuclear power station and much more. As I mentioned in a previous blog this should be embraced but I would not be surprised if in 2016 we see a large contractor fall under Chinese ownership.
• Housing has had its ups and downs but the Government, bless them, are trying to keep it going up but there has been a wobble with the struggle of Bovis – 2016 could see the skills shortage come to the forefront for housebuilders as they struggle to have workers on new sites. With policies designed to reduce planning regulations and encourage housebuilders to build more the Conservative Government are doing something but when the numbers are totted up I’d be surprised if we built more than 150,000 homes in 2015 (a clear 50,000 short of minimum required) and the gap between earnings and deposits continues to grow – so are we really in a better place?
• Housing associations had a bad year with a list of government policy changes following the May election. There is a need to let housing associations be just that rather than a housing company, which seems to be where they are currently heading.
• The skills shortage became worse in 2015 but did sit pretty on the industries agenda. Now a large number of businesses have begun to invest heavily but competition means that the highly skilled are being poached quickly. The apprenticeships levy may help but it’s a little unclear how much will benefit the construction industry.
• The 2015 election took up a lot of the headlines. I remember back to the controversial conservative policy of extending the Right to Buy to housing associations and the potential blip of the Labour policies (which in hindsight don’t really matter given what happened!) in stopping housebuilders land-banking and the infamous mansion tax. It has been an interesting post-election period as a number of construction policies faded into the night: the chief construction adviser, the zero-carbon homes policy, the Green Deal, subsidies for renewable power – all cancelled in the first four months. He may not be green but devolution and infrastructure are certainly advancing for the better.

The end result was a market place that saw good growth, that could have been better if there wasn’t supply issues but being positive would have meant a peak of the market much earlier if growth wasn’t dampened. 2016 will present some interesting opportunities but also challenges with a key point being addressing the need for new homes.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend

Lee