The housing market is one of this country’s biggest contributors to overall GDP. A strong housing market is generally considered as a bell-weather for a strong economy. In fact, it’s fair to say that the British are obsessed with home ownership. There are few other countries around the world where it’s population are as determined as we are to own their homes. Most are happy to rent.
That being said, one of the biggest threats said to come from Brexit is in fact to the housing market. Many have predicted that it will bring lower house prices, slow the mortgage market down and grind the overall market to a halt. So far though, there has been very little evidence of that. Unless you’re in London. There are various reports of house values falling and the market generally cooling down there. It’s worth remembering though that London is uniquely attached to Europe unlike the rest of the UK. Much of the rest of the country have been enjoyed a steady housing market, with steadily rising values and no real signs that it’ going to grind to a halt any time soon.
Still, lets say it does. Article 50 is triggered by March and negotiations start with the EU to leave. Currencies are up and down and all over the place, as are the stock markets and inflation. It’s going to be two years of ups and downs. It could upend the mortgage and housing markets. But from a glazing industry perspective, would it be such a bad thing?
Improving, not moving
Remember the financial crisis? Yeah I know, kind of hard to forget. It was a very rough ride for much of the glazing industry. Thankfully, even though we’re going to leave the EU, the UK economy is forecast, should you choose to believe them, to continue to grow. A far better return that the Great Recession.
But should the housing market decide to cool down during this period, it may not be the worst thing in the world for the glazing market. During the Great Recession there was a big move towards “improve, don’t move”, where the glazing industry and other home improvement sectors encouraged home owners to spend the money they had been saving to be used to move home to instead be spent on home improvement products.
Should the UK housing market cool over the next few years, our industry may move into the same gear again. And it could prove to be a successful strategy. The UK economy is in a much better position than it was 8 years ago. Home owners do have more disposable income than compared to 2008 and 2009. Interest rates are at record lows, so obtaining finance to pay for new windows and doors should be relatively simple. Yes inflation is starting to kick in, but with consumer confidence still relatively high, and a proportion of home owner sitting on growing piles of cash previously earmarked for house moves, it shouldn’t be enough to derail the industry.
Even if the housing market doesn’t cool off and we continue to see rising house prices and a liquid mortgage market, as an industry we perhaps should still be promoting the benefits of improving existing homes rather than spending more money moving house.
A fine balance
What would spell bad news for the industry would be if the housing market was to take a sever dip south. This is what happened during the Great Recession and we saw many home owners suddenly plunged into negative equity. Where house prices are worth less than the mortgage amount. When this happens it really does restrict the spending habits of those in this unfortunate position to almost zero. Big ticket items like new windows and doors go straight to the bottom of the list as more important things like paying for utilities and food take centre stage. It’s not a nice position to be in at all.
As much as I would like to see another big wave of “improve, don’t move” business come the way of the UK glazing market, there has to be a balance found within the wider housing market. For example, I want to see a big boost in the numbers of affordable homes built. There’s a generation locked at home, with a lot of saved money to spend. If we can unlock that generation and get them into homes, you never know, they may want to use some of that cash of new windows and doors.
On a wider point, I don’t think slowing house prices are all that bad. We all know how difficult it has become to get on the housing ladder. House prices have risen faster than wages for decades. It has locked in a generation at home with their parents. It has also held back a generation that otherwise would have been spending on their homes. That for me is lost potential we may never get back, and the UK glazing industry would have got a slice of that pie.
So if we do start to see a slide in the UK housing market overall, our industry shouldn’t see it as a negative omen, rather an opportunity to encourage home owners to spend their money on improving their existing homes instead with new windows, doors or perhaps a glazed extension.
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