Consumer spending held-up throughout the summer and with forecasts for renewed growth in the housing market within a year, could the ‘post-Brexit stars just be aligning’?
Being definitive about Brexit is just about impossible. Predicting its long-term impact on the UK economy and consumer confidence is even more so. But while Brexit has been sobering for business, it appears to have had less of an impact on consumer confidence.
In the immediate aftermath of the referendum a flurry of reports declared a collapse in consumer confidence. This included the market researcher GfK, which recorded the biggest slide in consumer confidence for 21 years in its one-off poll following the referendum on 23 June.
The group, which has been monitoring UK consumer confidence since the 1970s, said measures of confidence about the economic outlook, people’s personal finances and big purchases, had all fallen.
But at the end of the summer it seems that the UK’s actual spending habits are so far little changed and where they have, for the UK home improvement sector, isn’t by default a negative.
“I wouldn’t suggest for a moment, that Brexit hasn’t and won’t have a big impact on the country, the economy and our industry but dealing with the facts as they are now, things are far from catastrophic”, says Steve Mines, Sales and Marketing Director, Sliders UK
“Figures from Visa showed that UK consumers continued to spend right through the summer, albeit the rate of growth in consumer spending fell compared to the early part of the year. The adjustment in the housing market is also no bad thing, with growth forecast again within a year.”
According to Visa’s analysis, consumer spending rose 1.6 per cent year-on-year in July, up from a growth rate of 0.9 per cent in June. “What we have to be careful about is that a lot of this was driven by spending on ‘experiences’ rather than things, for example home improvements”, continues Mines.
“But what’s also interesting is that forecasts for home improvement also remain reasonably positive despite the initial slowdown in the housing market post-Brexit.”
Published at the end of the summer, a study by the Royal Institution of Chartered Surveyors (RICs) survey showed house price rises slowed significantly in the three months to the end of July.
It reported new buyer inquiries, home sales and new instructions all fell over the period with the number of surveyors reporting price increases outnumbered by 5 per cent by those seeing falls – dropping to its lowest in three years.
However, the RICs survey also suggested that house price inflation could accelerate within a year although it added that this new rate of growth was likely to be modest compared with 2015, or the start of 2016, when prices were rising by up to 10 per cent a year.
“Some realignment to increase the affordability of housing is probably a good thing”, continues Mines. “And if the Brexit vote has led to an immediate slowdown, it appears home owners are still prepared to spend on home improvements.”
The findings from the RICs and a suggested short-term cooling of the housing market, are consistent with those of another poll by Plentific which showed post-Brexit vote, one in 10 homeowners are now more likely to consider home improvements instead of selling.
Mines argues that while in ‘normal’ market conditions a slowdown would be likely to lead to a worsening of market conditions, the Plentific poll of consumer attitudes to home improvement coupled with record low rates of interest, suggest investment may be sustained.
“The Bank of England cut the base rate of interest to 0.25 per cent in August, making money far cheaper to borrow. The other significant factor is that unlike in 2008, the UK financial system is far more robust and banks are primed to lend.
“If people are sitting tight for a period of time while the dust settles, they may not just be far more inclined but also able, to invest in their properties.
“It may not necessarily be the big ticket items but investments which enhance their quality of life or which prime their properties for sale further down the line should continue to have appeal.”
This, according to Mines, gives door installations new weight in retail. He argues that with memories of summer living still fresh in the minds of homeowners and with the autumn chill ahead, bi-fold, inline sliding and composite doors are affordable, low disruption and high return home improvement options.
“People aren’t getting a return on their savings so the incentive isn’t there to save, with the base rate at 0.25 per cent borrowing is lower cost and if they’re waiting Brexit out for the next year or so rather than move, it’s worth investing in home improvements”, he says.
Offering lead times of just two weeks, Sliders UK model is built around the delivery of an expansive Part Q compliant bi-fold, inline sliding, French and composite door offer, from a single point of supply.
To this end it added a second aluminium bi-fold door system to its existing ALUK range, in the late summer, giving Sliders UK one of, if not the, industry’s largest bi-fold door offers.
The Ultimate Evolution draws on innovation in hardware, combining a ultra-smooth bottom running system with impressively slim sightlines – even compared to other aluminium systems.
This may give it end-user appeal, but it’s an innovative fully adjustable jamb option which dramatically simplifies door squaring and setting and increases tolerances, which is perhaps the biggest single innovation. An easy-adjustment system making if far simpler to align the door even where apertures are out of square.
“The Ultimate Evolution is technically very advanced – there are some great hardware innovations and it has some really slim-sightlines, even by aluminium bi-fold standards.
“The fully adjustable jamb option is another key feature, making it far simpler to square and set the door saving installation time but also ensuring smooth running, potential time lost to call backs.
“I’s also that little bit more affordable, which may just be the difference in persuading homeowners to part with their cash.”
Pas24:2012 and Part Q compliant, it’s also fully BS6375 Part 1 Weather Tested, the Ultimate Evolution is second bi-fold launched by the door specialist this year. It follows the launch of the Veka Imagine as a second PVC-U bi-fold system, in addition to its established Eurocell Ultimate Aspect PVC-U door range at the beginning of the year.
This followed the launch of the PremiLine PRO patio door from Kömmerling. “We have invested in our offer so significantly this year because regardless of Brexit, the market is changing.
“Brexit has perhaps increased focus on the importance of continued investment in supporting our customers in accessing new market opportunities.
“To date things have been good. Realistically, there are some slightly tougher times ahead as UK consumers adjust to the lower spending power of the pound.
“But it’s not 2008 and while growth may have slowed, Brexit doesn’t by default equate to crash. The decision has been made and it’s going to be what you make of it.”
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