Confidence in the South’s property sector continues to grow, according to a bellwether survey of sentiment.
The annual property survey by Smith & Williamson, the accountancy and investment management group, received views from more than 200 respondents, as well as over 60 from the South East, including the South Coast, as they look to the new year.
They fed back views on a range of issues, including government policy, access to finance and land development.
Julie Mutton, assurance and business services partner, heads up the Property and Construction group at the South Coast office of Smith & Williamson in Southampton.
She said: “Our bellwether survey demonstrated that confidence has happily grown by more than 20 points since 2014 – 92% found cause for optimism in the property sector for the next 12 months, with not a single respondent negative.
“Confidence in the residential sector continues to outstrip commercial confidence, at 84% and 72% respectively.”
Meanwhile, the vast majority of respondents want the UK to remain within the EU while 15% indicated that a British exit – Brexit – from the EU would have a positive impact on the industry.
Julie said: “The industry has traditionally been viewed as quite inward focused, which may make this finding surprising for some.
“However, when considering that the key components of the sector are also cornerstones of the EU, access to labour and flexible working, it is less so.
“The survey highlights the concern within the industry that should a Brexit happen there is a very high likelihood of access to labour declining as margins are squeezed.”
Global macroeconomic conditions and availability of finance weighed the most heavily on the minds of executives in the industry; 64% identified them both as one of their top three factors which would negatively impact their business over the next 12 months, reinforcing the potential ramifications a Brexit could have on the sector.
Julie said: “Funding has long been a critical issue for an industry where cash flow is paramount and margins are tight. Anecdotal evidence has suggested that, after the recent recession, loans to value are not what they once were.
“However, this is arguably a good thing as it may somewhat nullify the banking exposure to the peaks and troughs the sector regularly experiences.”
More than 92% felt they would choose mainstream banks as one of their most relevant sources of finance.
“This is 5% more than the national average which was a 22% rise from 2014, indicating that banks are opening their doors and beginning to offer more to their clients but also, perhaps, that borrowers are being more realistic. We would expect this to continue as the economy remains strong.”
Development of land was another issue highlighted by respondents. Simplifying the planning approval process (67%), encouraging planning authorities to agree to development (59%) and increasing the availability of development sites (47%) would have the biggest impact in helping the UK to meet its residential property building targets.
Furthermore:
· 45% ranked availability of development land as having the greatest impact on business
· 51% said that a co-ordinated approach to identifying under-utilised land would have the greatest positive impact on the UK property industry
· 66% ranked availability of developmental land in top 3 will have the biggest impact on the UK property sector over the next 5 years.
