Market for new homes rebuilt

The new homes market appears to be stabilising as confidence returns and prices increase, new data shows.

10:01 09 September 2004

The new homes market appears to be stabilising as confidence returns and prices increase, new data shows.

In August the average price of a new property was 277,445 - up 1.8 per cent on July. This follows three consecutive months of decreases as the fear of interest rate rises and uncertainty over the market combined with the annual summer slowdown affected price levels.

The data comes from SmartNewHomes.com, the UK's leading new homes website, which feels that confidence in the market is returning.

The chief executive of SmartNewHomes, David Bexon, commented: "As we expected, this month's index shows that the new homes market is not crashing into oblivion, but stabilising itself."

He added: "With supply and demand prices more inline, both new homebuyers and developers should expect a healthy market going forward. The Bank of England's interest rate rises seem to have done the trick in slowing price rises without causing a crash and we certainly don't see a need for further rises."

The price homebuyers are willing to pay for a new home has continued to increase, rising 1.5 per cent over the last month and 6.9 per cent over the year. This is the highest rate of annual growth in demand since the end of 2003.

Mr Bexon concluded: "What we are seeing is that the demand is still there, particularly for new homes. New homebuyers have demonstrated that they are willing to pay more to secure the property they want and it is this strong consumer demand which will prevent prices falling in the next few months."

The UK's most expensive regions were hit hardest by the recent dip, with London, the south east and East Anglia all recording price decreases of up to one per cent from the previous month.

In contrast, the northern boom continued as the north and north west witnessed average new home prices rising to around 200,000, with Wales seeing the strongest increases.