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This growth has been driven by increasing private housing activity and, latterly, by a rise in industrial sector projects. Industrial and private new housing activity are expected to remain important drivers for further growth over the next two years. 

Nationally recent months have seen housing market activity distorted by short term factors, including the introduction of a stamp duty surcharge on buy to rent and second home purchases. This promoted a rush of such purchases in the first quarter ahead of the deadline and led to a temporary weakening in prices and activity during the second quarter. The impact on the East Midlands’ housing market appears to have been modest, however, with the Nationwide reporting average house prices in were just 2.2% higher in the first quarter than a year ago. Similarly, a net balance of 10% of surveyors responding to the latest RICS survey reported a dip in agreed sales in the region during April compared to a balance of 22% reporting a fall nationally. Furthermore a net balance of 5% of surveys expect prices in the region to rise over the next three months, compared to a balance of 10% of surveyors expecting prices to fall nationally.  

Housebuilders have continued to strengthen their development pipeline in the region, with the number of units granted planning approval during the first quarter of 2016 being 39% up on a year ago. Against this background positive regional outlook we anticipate a strengthening in project starts over the coming months.

Strong demand for distribution and logistics space has been the main driver behind industrial sector growth in the region over the last few years. Unfortunately the first half of 2016 has seen a scarcity of such projects starting on site as investors have held back from making a final commitment to projects ahead of the EU referendum. 

Nevertheless, the development pipeline remains firm and revived flow of project starts is anticipated once the political fog has cleared. Indeed recent months have seen the approval of plans by Prologis for major warehouse / rail freight interchange (Project ID 15419867) at Northampton.

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