With Election Day in full swing, Kbsa national chair Richard Hibbert considers the outlook for the kbb sector.
The focus of the election for the main parties has been Brexit and investment in key services such as the NHS, education and social care. Brexit is clearly an issue that will effect businesses not just because of the terms of the deal and trading agreements but also the impact the process will have on the economy.
There is still much uncertainty about Brexit and it is this uncertainty that makes consumers and business cautious about spending and investment.
A recent British Chamber of Commerce report suggests that uncertainty over Brexit and over the General Election will squeeze consumer spending and push down retailer margins which in turn will slow growth.
Anecdotal evidence from Kbsa retailers is mixed. Some retailers are reporting that the market remains buoyant with average spends rising, albeit with quieter periods during holiday and in the lead up to the election.
Others suggest that there has been a change this year and things are not quite as good as they were. Footfall remains good and order books are still full but consumers are more cautious and not spending as much. This could be down to uncertainty but another important factor could be less disposable income. A typical Kbsa customer will be older, spending money on their home now that the children have left. These couples now find that their money is being diverted into the Bank of Mum and Dad to help their children get on the property ladder, leaving less for them to invest in their own home.
Whatever the results of the Election today, the housing crisis will not be a quick fix and it will remain difficult for first time buyers for some time. Brexit will still need to happen, whoever wins and the impact on the economy over the next two years is still uncertain.
Whilst these factors suggest that things may get tougher, the overall economy is in good shape. Manufacturing output has increased during the year by 0.5% as the drop in the value of Sterling triggered an increase in UK manufacturing. Unemployment has been steadily falling and now sits at 4.8% compared to a figure of 8% just 4 years ago and interest rates are at their lowest levels for 50 years.
At the same time life is becoming more expensive for the consumer with inflation hitting its highest level in four years, and wages dropping in real terms for the first time in three years.
With no crystal ball to fall back on, the only certainty we have is that the outlook will be uncertain for some time to come.