When the property market crashes, no one is untouched. When house prices are on the rise, it encourages consumer spending and results in economic growth and buoyancy about the state of the economy. When it crashes, and property prices drop significantly, consumer confidence falls, and they cut their spending resulting in the economy almost coming to a standstill. The construction industry is one of the sectors that can take a significant hit.
A property market crash can be positive in that it brings down house prices, making them more affordable. It is the impact on specific industries during the crash that is not as positive. The construction industry is a sector adversely affected during a crash with new home construction being the first to slow down significantly placing immense pressure on trades and services in this industry. Architects and draftsman are one such group that has the potential to be impacted and are required to plan ahead to ensure they have a cushion during these harder times.
The property market is cyclical; it is always going to have peaks and troughs. Therefore, architects and draftsmen need to diversify during these leaner periods in the property market. Architects and draftsman need to be smart with their business objectives and ensure they diversify by looking outside the box at projects such as schools or places of worship.
Architects and draftsman can also benefit from the push for higher density living during a property market crash. People are gravitating towards apartments for an easy, low maintenance lifestyle. Longer working hours and a desire to socialise as opposed to doing home maintenance have seen apartment living increase in popularity. There has been with a shift away from the traditional preference for a semi-detached house. Add to this that apartment construction is no longer limited to inner-city locations and is now seeping out into the suburbs, these projects are expected to continue to boom. A study by McCrindle in 2017 predicted that apartments would be the main form of housing by 2050. Despite the prices dropping on housing, people are still desperate for housing and need somewhere to live. Prices going up will not change this.
The infrastructure sector can also provide a safety net for architects and draftsman during a property market crash. Growth hotspots offer a myriad of opportunities for architects and draftsman, such as railway projects, airports, bridges, and the list goes on. These are longer-term projects that can keep an architectural firm busy throughout a property market crash.
Not unlike others, architects and draftsman can be impacted negatively by a property market crash. Diversification in the work they take on will be the key to whether they can sustain the effects of a property market crash. If they continue to diversify when looking at work and trim back the excess within their business, draftsman and architects should be able to ride out the storm and limit the potential impact a property market crash can have on their business.