The AJ rounds up of what industry experts are saying will happen in the coming weeks
Allan Wilen, economic director at industry analyst Glenigan
Contractors and material suppliers will need to be especially alert to potential disruption to the timing and realisation of projects on their order books.
Recent months have seen private-sector investors delaying investment decisions ahead of the vote. We expect investors to now reappraise their industrial and commercial property development plans in light of the vote. The London commercial property market looks especially vulnerable as many financial institutions need to be located within the EU.
The economic and political uncertainty is also likely to dampen activity in the housing market and private house-building activity over the coming months.
The decision to leave could help boost opportunities in the hotel and leisure sector
In contrast, the decision to leave could help boost opportunities in the hotel and leisure sector over the medium term as weaker exchange rates attract overseas tourists and encourage more UK residents to holiday at home.
Near term, the flow of public-sector work should not be affected by the Brexit vote. The regulated utilities, the water industry, Network Rail and the National Grid, will continue to press on with planned capital programmes agreed with their regulator.
Richard Garner, head of commercial at Daniel Watney
In the run-up to the referendum we saw major occupiers threaten to leave if Brexit happened, and now we will see if they make good on their promises. There are a lot of reasons for them to stay in London, from a convenient time zone to a strong regulatory environment, but the prospect of losing access to the single market may be too much.
For more risk-happy investors, the fall in the pound may prove a good buying opportunity, but the turbulence caused by the out vote will likely mean many stay away, with London’s safe haven status now in doubt.
Grainne Gilmore of property consultancy Knight Frank
The vote in favour of Brexit could have a relatively swift impact on the housing market. The scale of this effect, especially in the medium to long term, will depend on the outcome of negotiations on the UK’s exit.
In the short term, consumer confidence is likely to be knocked by the continued uncertainty, especially with regards to trade.
Post-Brexit uncertainty could result in a further dampening of homes coming on to the market
This may weigh on activity in the market, especially those making discretionary purchases, which could result in a slip in transaction volumes and prices. However, uncertainty could also result in a further dampening of homes coming on to the market, and this lack of supply would provide a floor under prices.
There is also a chance that mortgage rates become detached from the base rate. While the base rate may well be cut in the coming weeks, lenders could raise their rates to control their lending levels.
Both the reduced availability and increased cost of credit could put additional pressure on transactions as well as affordability. However, it is worth noting that much mortgage activity recently has been in fixed-term, fixed-rate deals, ranging from two to 10 years. Borrowers on such deals will not be affected by rising mortgage rates over these time frames.
In the longer term, any increase in inflation could trigger base-rate rises, which would again translate into higher mortgage rates. This scenario would be more challenging for those on variable rate deals. If house prices are also declining, this will put the most pressure on highly leveraged borrowers.
The second-round effects of a slowing economy and growing unemployment will also be felt in the housing market, as these factors affect household incomes as well as sentiment.
In the short to medium term, the fundamental demand and supply dynamics in the market are unlikely to change, with a continued structural undersupply of homes across the country, underpinning pricing in some of the most desirable and best connected areas.
Richard Donnell, director at property market analyst Hometrack
The near term prospects for the UK housing market now look very uncertain. The immediate impact is likely to be a fall in housing turnover and a rapid deceleration in house price growth as buyers wait to see the short-term impact on financial markets and the economy at large.
The decision to leave the EU will be most keenly felt in the London housing market which is fully valued and already facing headwinds. History shows that external shocks can reduce sales volumes by as much as 20 per cent with sales volumes already down over the last year.
External shocks can reduce house sales volumes by as much as 20 per cent
House price growth is already weak and running in low single digits in central London areas. Modest price falls now appear likely in higher value markets as prices adjust in the face of lower sales activity. Even a sharp fall in Sterling is unlikely to attract overseas buyers in the near term.
Across London, where house price growth is running at 13 per cent, we expect the rate of growth to slow rapidly on greater uncertainty. Market activity in the capital is set to remain disrupted until consumers and the financial markets can see a clear strategy to manage the process to a position where the outlook for the economy, jobs and mortgage rates becomes clearer.
Brian Berry, chief executive of the Federation of Master Builders
The UK construction industry has been heavily reliant on migrant workers from Europe for decades now – at present, 12 per cent of construction workers in Britain are of non-UK origin. The majority of these workers are from EU countries, such as Poland, Romania and Lithuania, and they have helped the construction industry bounce back from the economic downturn when 400,000 skilled workers left our industry, most of who did not return.
It is now the government’s responsibility to ensure that the free-flowing tap of migrant workers from Europe is not turned off. If ministers want to meet their house-building and infrastructure objectives, they have to ensure that the new system of immigration is responsive to the needs of industry.