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Development land values in England and Wales rose for the fifth consecutive quarter in Q1 2014, although the pace of growth was slower than that seen in the three preceding quarters, at 0.8% compared to a 2.4% increase between October and December last year. 
 
The direction of travel is still upwards however, with the annual rate of growth rising from 7.1% in 2013 to 7.3% in the 12 months to the end of March. Land prices are rising as the housing markets in many parts of the UK are gaining momentum for the first time since the financial crisis. 
 
The latest Knight Frank/Markit House Price Sentiment Index shows that households in every region of the UK felt that the value of their home rose in March. Transaction levels in February this year were nearly 32% higher than in February last year, and at levels not seen since 2007. The structural undersupply of homes in the UK is well documented. But demand was constrained in the years following the financial crisis because of a lack of mortgage finance.
 
This problem has been addressed through Funding for Lending, and since March last year, via the Help to Buy Equity Loan. Help to Buy broadened the scope for buyers to climb onto the property ladder, as well encouraging a step up in development activity. So far it has helped more than 16,000 buyers purchase a new home – the regional take-up of the loan is shown in figure 2. The Chancellor’s announcement last month that this scheme would be boosted by £6 billion and extended by 4 years to run to 2020 was broadly welcomed in the industry, as it will allow developers to commit to larger-scale projects which take longer to build out. 
 

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