Founder of high-end residential construction company Golden Houses Development Monika Slowikowska says building will bounce back

The immediate aftermath of the EU referendum was bad. Very bad. The pound fell, stocks plummeted and experts were predicting that prices would rise and investment in UK property projects would fall. At Golden Houses Developments, events certainly confirmed those predictions. The day after Brexit, seven of our building materials suppliers told us they‘d be raising their prices in July – the hikes ranging from 3 to 8%.

Banks holding lending

Then, on the following Monday, while checking the stability of our clients’ funding, we learned that one of our projects is being put on hold. The client’s bank has withdrawn from talks while it analyses the new economic environment. The client contacted 11 other banks and they all said the same thing: no engagement until they know what’s happening in the property market. What’s significant here is that our client owns the property it’s borrowing against and that the funding it seeks represents just 50 % of its value. Banks are refusing to talk to would-be borrowers even where the risk profile is extremely low. So, we can’t deny that the industry will be hit and many businesses may fail. 

We expect the cost of building projects to increase and that homebuyers and developers will find it harder to borrow money. The same time contractors will be forced to keep the prices low as competing for the remaining on the market projects. This will result in the loss of profitability and inevitability the fall of some contractors.

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Control costs

However, I know our sector will bounce back. If we stay flexible, negotiate well with suppliers and clients, control our costs and become even more efficient, we will overcome these challenges. As an industry, construction is always one of the first to feel the effects of a recession or economic downturn. We’re used to the cycle. The difference this time is that the economy was essentially stable in the last few years and the natural downtime will be dramatically deepened by the results of Brexit. I also believe many businesses have forgotten how to prepare and save for times like these. We need to become more streamlined and minimise wastage wherever it exists and no matter how small. We must also focus on what we can achieve, not what we can’t. If we toughen up, focus on the positive and look for opportunities, we can still thrive in this uncertain new world.