Southampton new home completions up 166%

There were over 131,000 housebuilding completions in the past year, according to the latest government data. The figure represents a 15% increase on the previous 12 months and is the highest annual total recorded since 2009.

Private housing starts in England increased by 3% in the 12 months to June 2015 when compared with the same period a year earlier. In the year to June, 112,870 private new homes were started. On a quarterly basis, private starts fell by 12% to 28,110 during Q2 2015, when compared with the first quarter of the year.

The biggest increase in completions was recorded in Southwark, where there was 178% more in the year to June when compared to 2014.

Southwark was followed by Southampton (+166%), Manchester (+138%), Northumberland (+125%) and Sunderland (+111%).

Commenting on the figures, housing minister Brandon Lewis said: “Our One Nation government has got the country building again with today’s figures showing that 131,060 extra homes have been built in the past year. This has provided a real boost to the UK’s construction industry and is delivering the homes that hard-working people rightly deserve.”

“However, we know there is more to do. That is why we have outlined plans to deliver 275,000 affordable homes by the end of this Parliament – the fastest rate of building for 20 years.”

“We’re also determined to support those who aspire to own their own home, which is why we’re making up to £10 million available to bring forward brownfield sites to build new Starter

Homes which will be available to young first-time buyers at a 20% discount,” he added.

In response to the government’s figures, the Residential Landlords Association (RLA) is calling on local authorities not to become roadblocks to delivering new homes.
The RLA’s plea comes as the government is soon expected to make permanent a measure introduced in 2013 which makes it easier to convert redundant, empty and under-used office space in to new homes.

“With the [rental] sector expected to account for twenty five per cent of UK households by 2025, it is vital that the planning system does not put unnecessary obstacles in the way of landlords seeking to meet this demand,” says David Smith, the RLA’s policy director. 

“The Government’s intentions are clear and local authorities should not seek to thwart them. Instead, councils have an opportunity to show themselves to be willing partners in delivering the mix of homes their communities need.” 
https://www.estateagenttoday.co.uk/breaking-news/2015/8/more-homes-are-being-delivered-government-reports 

Southampton Property Values 6.1% higher than year ago

Southampton property values rose by 1% last month, meaning they are 6.1% higher than 12 months ago. Overall, I expect future property price growth to remain firm, built on the foundations of an improving labour market, strengthening economy and very low mortgage rates. In fact, talking to a number of other agents in the city, mortgage arrangers and solicitors (all of whom have their direct finger on the pulse of the Southampton property market), the steady long term growth in Southampton property prices helped by strong demand so far this summer, alongside an underlying lack of supply and the continued low mortgage rate environment, means the slow but steady upward momentum of the Southampton property market is likely to continue in the second half of 2015.

However, there are a couple points I wish to highlight as all my blog readers will know, I like to give a balanced and honest opinion of what is happening in the Southampton property market.  The two main points being low interest rates and a lack of supply of property. 

Interest rates first - Mark Carney (Chief of the Bank of England) said in a speech a few weeks ago at Lincoln Cathedral, the Bank will be seriously considering raising interest rates around Christmas time. An upward movement in interest rates will temper demand and result in a marked slowdown in house price growth. Mr Carney said that only six out of ten people that had a mortgage (57% to exact) had a variable rate mortgage, compared with more than five in seven (73% to be exact) in the Summer of 2012. Now I am not a mortgage arranger and cannot give advice, but rates are only going on one direction, so whether you are a landlord or homeowner, this might be a time to consider fixing your mortgage rate?  Don’t say I didn’t warn you!

Tie this in with the stricter mortgage lending rules which were introduced in 2014, which affected people’s ability to have larger mortgages, this means homeowners will need to be realistic in their pricing if they want to sell. Reading other recent reports though, property owners have continued to pay off mortgages at a faster rate while mortgage rates have been low. Therefore, when mortgage rates rise, the effect on home movers sentiment which, given the shortage of supply, would result in a marked slowdown in the rate of house price growth.

Shortage of Supply – As I have mentioned in previous articles, the number of houses on the market in Southampton is at an all-time low. One reason is the large number of buy to let landlords who have bought Southampton property over the past fifteen years. Unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties long term, meaning there are less properties coming onto the market ... thus restricting supply and sales. In fact over the last two months, only 546 properties in the Southampton City Council area have changed hands and sold, compared to 576 in the same period in 2014, a not so insignificant drop of 5.21%.  

If you are planning on investing in the Southampton property market, or just want to know more about our local market please do give me a call.

Forecast of even stronger price growth in next 12 months

The imbalance of supply and demand in the housing market “will lead to even stronger price gains over the next 12 months” warns the Royal Institution of Chartered Surveyors.

“This trend could be brought to a halt when base rates do eventually begin to rise but the dovish tone to the latest Bank of England inflation report suggests the first move will come a little later than previously thought likely and that subsequent increases will be very gradual indeed” says RICS chief economist Simon Rubinsohn.
The institution says the continued inability of government to address the problem of new homes supply lies at the heart of the problem.

“A coherent and coordinated house building strategy is required across all tenures. This should include measures that will kick-start the supply-side, such as mapping brownfield, addressing planning restrictions and creating a housing observatory to assess the underlying economic and social drivers of housing and provide the impetus for solutions” explains RICS’ head of policy, Jeremy Blackburn. 

RICS says a famine of homes for sale shows no sign of changing in the immediate future with the number of properties coming to the market having now fallen for six successive months while the number of new buyer inquiries has been increasing for four months.

Each RICS member now has an average of just 47 homes on sale, with new listings down in nine out of 12 regions - East Anglia has seen the sharpest fall. 
RICS is warning that there is now a “vicious cycle, as the limited choice on offer is deterring would-be movers and therefore further restricting new instructions”.

 https://www.estateagenttoday.co.uk/breaking-news/2015/8/forecast-of-even-stronger-price-growth-in-next-12-months