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News - 11 April 2014

Shortage of property to make House prices rise.

According to the Royal Institution of Chartered Surveyors (Rics), surveyors sold an average of 23 homes during the three months to March - the highest number since February 2008, thus fuelling fears that many buyers will be priced out of the market.

The mismatch between the lack of supply and rising demand is a "major concern" and is continuing to put an upward pressure on prices, the surveyors' body said.

Simon Rubinsohn, Rics chief economist, said: "Now that the housing market recovery is well and truly under way and mortgage finance is more readily available, buyers seem to be looking to test the market right across the country, not just in the usual hotspots of the South East. That said, it is a major concern that we are not seeing enough houses coming on to the market.”

Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“Government support schemes such as Help to Buy have made mortgages more widely available, particularly for people with only smaller deposits saved who may have previously been struggling to get a deal. But critics of the scheme argue the impact it is having in pushing up demand, without a corresponding increase in the supply of homes, is also pushing up house prices and encouraging people to stretch their borrowing.”

Prices are expected to rise by around 9.3% a year in London, which would push average property prices in the capital to over £567,000 by 2020. While in the North prices are set to increase by 2% annually, which would see average house prices there increase to just under £132,000 by 2020. In Wales, it is predicted house prices will rise by 4.9% annually and in Scotland a 4% rise is predicted.

The Government, however, are bringing in toughened mortgage lending rules with the aim of preventing overlending to borrowers who may end up having trouble paying back, particularly when interest rates rise.

Housing Minister Kris Hopkins said: "Leading developers have pledged to build more as a direct result of this increased demand, and we've already delivered 420,000 new homes since 2010, including 170,000 new affordable homes."

If you need any help and advice for your business on the implications of central and local Government Funding initiatives and the construction industry, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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Great with people  
Clear and precise with advice
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In touch with issues that face our clients
Mindful of our client’s long term strategic goals

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