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Reports Jones Lang LaSalle, Southampton
Southampton, 24th October 2013: As part of the economic recovery it is crucial to get the housing market moving again but at a steady rate in order to avoid another house price bubble. The government’s ‘Help To Buy’ scheme which provides government guarantees for low deposit mortgages has stimulated a boost in sales, especially for First Time Buyers who are up 30% compared with last year. Mortgage lending to landlords has also increased resulting in a surge of enquiries for entry level starter homes, most notably one and two bedroom apartments where they can achieve yields of circa 6%. Generally the residential market in 2013 had a slow start but momentum has grown over the year, market confidence is now much stronger, nationally house prices are reported to be rising at the fastest pace since 2007 and demand still outstrips supply.
The economy has turned a corner but how sustainable is it? London is fuelling the rise in prices on a national level but there is evidence of price growth happening on the south coast and across England. There is no doubt the Help To Buy scheme has increased sales of new homes and helped boost the construction industry. Some agents report that this boost in market confidence has transpired into the second hand market, but not to the same extent of new homes. There are new government plans for low deposit mortgages for second hand homes due to start in January 2014 but this has been received with mixed emotions. It is probably too early to tell whether these schemes will result in another housing bubble but no doubt the Bank of England, the Council of Mortgage Lenders and the RICS will be monitoring this very closely to avoid any repercussions.
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