A post-Brexit downturn could trigger 119,000 job losses, researchers have warned.
Research by the Centre for Economics and Business Research, warned the impact of Brexit is likely to lead to a slowdown by private developers as they struggle to protect their share price and business model.
The CEBR warned a construction slowdown may be on the horizon with shares in construction companies, exchange rates and financial markets all hit by post-referendum uncertainty.
It also argued the social housing sector could be a lever for the government to prevent an economic slowdown.
Their analysis for the National Housing Federation also showed that a slow in housebuilding similar to that of the 2008 recession would wipe out more than a third of GDP growth (£142.5bn) and result in the loss of nearly 120,000 construction jobs by 2026.
Details were set out the NHF Brexit conference that heard how market volatility meant that between 2007 and 2009 private development dropped off 37%.
The event also heard how shortages of labour and increases in imported raw materials are set to create a perfect storm for the housing sector.
Ratings agency Moody’s raised concern at the event over exposure to shared ownership schemes and policy uncertainty.
The NHF and the Charted Institute of Housing (CIH) called on the government to back building by housing associations and local authorities.
To do this, the affordable housing sector urged the government to relax restrictions on the tenure of homes – whether they are built to rent or buy – to allow housing associations to respond to the market.
The sector has identified £7bn of already planned funding, which could be used more flexibly; £4.7bn for shared ownership and supported housing and £2.3bn for the remediation of brownfield land for starter homes. For every further billion pounds that the government invests flexibly, the sector could build 33,000 homes.
Government should also offer councils a refreshed ‘deal’, the sector says, including flexibility in the caps that limit local authority borrowing for housing, in return for specific commitments on new supply, including better use of assets and of local authority-owned land.
It has already identified £300m of extra borrowing for local authority housing, but this needs a better, more flexible, approach if local authorities are to build new homes, at scale.
David Orr, chief executive of the National Housing Federation said: “The warning signs are flashing amber – housebuilding may be set for a slowdown – but housing associations have a track record of building through tough times. Demand for good quality rented homes remains high.
“It is a plan that comes at no extra cost to the taxpayer and one that will improve the life chances of hundreds of thousands of working people in this country. Uncertain times call for pragmatism and flexibility.”
He added that the government could look at widening its review of the rent cut: “There is a lot more traction now. A case for government setting rent becomes smaller and smaller with every passing day. We will continue to make the case for government removing from rent setting.”
Terrie Alafat, Chief Executive at the Chartered Institute of Housing said: “There are already signs that the housing market is beginning to weaken. It is critical government takes action now to ensure the supply of new housing we need to address our national housing crisis does not falter.
“Local authorities and housing associations are not dependent on shareholder sentiment and are able to keep housing supply going when the private sector stalls without requiring extra government spending.”