Southampton: CBRE reports strengthening property market in the south

As consumer confidence continues to increase, the UK economic recovery is firmly underway with the national housing market showing signs of strengthening.

CBRE reports a substantial pick-up in demand, with the latest data highlighting that transactions during the first quarter remain high, having reached 1.1 million in 2013, the highest annual level since 2007.

The news follows recent confirmation from the Council of Mortgage Lenders (CML) that there was an estimated gross lending of £15.2 billion during February, and while this was 6% lower than the previous month, lending is now 43% stronger than a year ago.

Land supply in the south is also improving as a consequence of some successful “smash & grab” opportunities being granted planning consent due to known land supply deficits. The planning system across most local authorities is now beginning to deliver because of its past failure to provide a robust five-plus year housing land supply.

Mark Budden, senior development director at CBRE in the south, commented: “Regional residential land values increased by over 20% last year. With the improving economic outlook, strong demand and lack of supply for well-located sites, and the roll-out of the Government's Help to Buy programme, there is every reason to think that this upwards trend in values will continue throughout 2014.

“Across the south demand for land remains strong, but purchasers are becoming increasingly selective as their land banks get replenished. Values are strong, although rising at a lesser rate, and sales are still being achieved on favourable terms in every case. As a result banks are increasingly re-entering the market, but only at low debt/equity levels and to long-term valued customers.

“Like other regions we are seeing housebuilders increasing their number of outlets and sub-dividing region and those such as Bellway Thames Valley, alongside Redrow and Countryside now actively pushing into the Hampshire market.

“As with most regions, the recent government announcement to extend Help To Buy until 2020 has been welcomed, particularly as the market was beginning to ‘mutter’ about the consequences of the scheme’s withdrawal.”

Jennet Siebrits, head of residential research at CBRE, said: “The number of transactions remains well below the long-term average, which reflects the continued constraints for many of today’s buyers. The lack of stock currently on the market continues to create an imbalance between supply and demand, which in turn has increased house prices right across the country.

“Despite the improving housing market, it is premature to talk about a housing market bubble; although we recognise the housing market outside of London remains fragile. While the recovery at a national level appears to be building momentum with quarterly house prices improving and regional land markets remaining buoyant, it is of the utmost importance that the recovery broadens its geographical reach in order to prevent a two-tier economy.”