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News Release

Southampton

Increased confidence in the housing market

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%.  NR6860 STEPHEN KNIGHT.jpg

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.

Locally, the Southampton office has seen a notable increase in residential development valuations work for new developments.  Stephen Knight, Residential surveyor at Jones Lang LaSalle said:  “We are seeing off-plan sales and reservations gradually returning to the market, especially for well specified and well located developments that are sensibly priced.  For example, the new courtyard style development ‘Vanners Court’ comprising 14 units by Bargate Homes in central Salisbury has received 11 reservations before a formal marketing campaign.  Also, the redevelopment of the former Fairfields Hotel in Studland, which has been converted into four luxury contemporary houses, have all been sold off-plan. Feedback from local agents over the past twelve months has mostly been positive with an increase in enquiries and sales, although transactions are still taking longer to complete compared with pre-2007.  Developers have an increased appetite for residential land, especially for sites with planning permission and
on occasion this has resulted in bidding wars.  We are seeing developers willing to accept lower profit margins to secure desirable sites in prime locations, such as central Winchester and sought after village locations.”
 

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.