Warning rising house prices are forcing people out of Southampton

Figures have revealed that Southampton has had one of the fastest house price increases in the UK so far this year.

Industry experts say it is becoming an increasing problem, with a lack of houses to sell creating problems for potential home owners.

And they have warned that the problem may only get worse, with concerns that there aren't enough new developments being built and students living in privately-rented housing instead of purpose-built accommodation taking stock away from first-time buyers and families.

The figures released by property market experts Hometrack show that the average price of a house in Southampton is now £211, 400, having risen by 3.3 per cent in the last three months.

With the average salary in the city standing at £26,256 this means it would take eight years with no outgoings to buy a home.

Now the cities MPs say they fear this will mean many potential homeowners will see the city as "out of reach."

Southampton Itchen MP Royston Smith said: "This isn't good for anyone. It's all about supply and demand and at the moment we don't have enough new houses being built and as prices go up it becomes more and more out of reach for people, people will start to just say it's too difficult."

But MP for Southampton Test Alan Whitehead said he thinks it's a sign of a strong economy in the city.

He said: "On one hand I think it shows that the South Coast and particularly Southampton has caught up and this shows the growth in our economy.

"On the other hand it is also a sign that not enough houses are being built, driving demand up and making it seem hard to reach for many people."

Hometrack's report said quarterly city house price growth was at its strongest for 12 years across the first three months of 2016 - as the usual seasonal upswing in housing market demand was boosted by investors ahead of changes to stamp duty.

Southampton ranked joint-fourth in a list of house price increases in 20 of the UK's biggest cities, with Portsmouth 12th and Bournemouth 16th on the list, showing that the South is in high demand for property buyers this year.

Hometrack said a rush of buy-to-let investors trying to beat a three per cent stamp duty increase for people buying second homes, which kicked in on April 1, helped to push up prices in the first three months of this year.

The stamp duty increase applied in England, Wales and Northern Ireland, with similar tax increases also taking place in Scotland, where stamp duty has been abolished, to avoid the housing market being distorted there.

Hometrack said investors have been looking towards cities like Southampton, where house prices are lower and there is potential for greater rental returns for landlords when compared with the relatively low cost of buying a property.

Sean St John, branch partner for Southampton-based estate agents Fox and Sons, said: “The first three months of this year we have had a lot of investors buying properties which have pushed up the price. The reason why prices are going quite high is because there’s a desperate shortage of stock so there’s more and more buyers out there than there are properties.

"There’s this new era where people are fighting for a property and it's extremely competitive, there’s not enough properties which is pushing the prices up and up, it’s just supply and demand but demand is through the roof and supply if on the floor.”

Average house prices in UK cities and rate of increase in %:

• Cambridge, £403,500, 2.7%
• London, £468,100, 4.1%
• Bristol, £248,800, 3.3%
• Southampton, £211,400, 3.3%
• Portsmouth, £212,000, 2.6%
• Bournemouth, £258,700, 1.4%
• Oxford, £377,600, 1.3%
• Birmingham, £140,300, 2.6%
• Cardiff, £191,300, 3.5%
• Leeds, £148,800, 2.6%
• Leicester, £148,000, 1.3%
• Manchester, £141,900, 2.5%
• Edinburgh, £198,000, 2.7%
• Nottingham, £134,100, 1.9%
• Liverpool, £113,100, 4.1%
• Glasgow, £110,400, 2.8%
• Belfast, £121,200, 0.9%
• Sheffield, £126,100, 2.0%
• Newcastle, £120,600, 0.9%
• Aberdeen, £188,000, 1.4%

CASE STUDIES

Aaron Cassidy, 28, part-owner of Hedge End Golf Centre, from Eastleigh said: “Buying my first house probably won’t be easy to do because they seem really strict about credit and you need a lump sum for the deposit.

It isn’t only the deposit money you need because it’s important to think about furnishing the house after you buy too.

I think I will be able to buy in the next few years but only because the business is going well at the moment.

Buying a place with a partner seems much easier, if you wanted to buy for the first time on your own I would say you’d need a wage of at least 30k, something over the national average anyway.

It probably won’t be easy to find my first house, I wouldn’t consider relocating too far because of jobs but I can imagine it is cheaper in other parts of the country.”

Briony Mutter, 22, a business student from Southampton, said: “I wouldn’t even think about buying my first house by myself, especially in the South of England.

The only reason I can look into buying is because I am going to do it with my boyfriend and he earns a good wage. It also helps that I am moving to Coventry, the house prices are so much cheaper up north.

It is scary but really exciting at the same time, I am worried that we will be able to get the deposit together but then we won’t be able to get a mortgage.

I would say that a person looking to buy on their own would need to be earning a yearly wage of around £40k, that is pretty impossible for anybody in their early twenties."