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News Release

Nottingham

East Midlands Budget Comment

from Jones Lang LaSalle's lead director in Nottingham, Matthew Smith


Smith Matthew.jpgNottingham 20th March, 2013 - News of budget measures to get millions more people onto the property ladder sent the quoted housing sector higher on Tuesday, but Matthew Smith, Jones Lang LaSalle's lead director in Nottingham, believes the radical measure may have a significant downside.

"We saw the shares for such companies as Barratt Developments and Taylor Wimpey move up sharply, against the pre-budget trend, and I can see how the initiative will help unlock latent first-time buyer demand in the East Midlands," he said.
 
"Existing homeowners who are trapped on the ladder because they don't have sufficient equity should also benefit. However, my concern would be that house prices will could well trend upwards, and as people should remember, house price inflation was a key driver for the economic crash.
 
"There is also a danger that people now go ahead with house purchases, but don't fully factor in what will happen to their borrowings when interest rates eventually begin to rise. It may feel as if the current record-low rates are permanent, but history tells us that they are just a blip."
 
Smith welcomed the £3 billion rise in infrastructure spending, which he hopes will be used to kick-start some of the region's smaller regeneration schemes.
"It's a relatively small amount by comparison with the government investment which has traditionally gone into spending on road and rail, but it may help around the edges," he said.
 
"The bigger issue though, which hasn't been addressed by the chancellor, is the hundreds of infrastructure schemes which are being stalled in Whitehall by excessive red tape, and a complex and expensive planning system."