Following three consecutive months of decreases as the fear of interest rate rises and uncertainty over the market combined with the annual summer slowdown had its effect on price levels. However the figures show that the seasonal dip is now over and prices are rising again, albeit more steadily than in previous years.
Confidence returning?
Homebuyers have on the whole sat tight over the summer months, waiting to see how the market would respond to persistent interest rate rises and predictions of a mass slowdown. However many buyers are now returning following a general stabilisation in the housing market. As a result, the price homebuyers are willing to pay for a new home has continued to increase rising 1.5% over the last month and 6.9% over the year. This is the highest rate of annual growth in demand since the end of 2003.
Expensive areas hit hardest
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 1% 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. Wales has seen the strongest increases, with property prices up sharply by 8.6% in the last three months reflecting the large amount of redevelopment taking place around Cardiff and South Wales.
London still in demand
Despite stock prices in London decreasing slightly over the last three months, demand prices have risen with homebuyers now willing to pay 7% above market prices for a new property in the capital. This reflects the continued strong consumer demand for new homes in London as well the shortage of developments available to meet this demand.
South East beaches push region back in to favour
The South East has traditionally joined London and the West Midlands as the key regions with more homebuyers looking to move out than in. However the summer months have seen a reversal in the South East as its migration figure went from a dip of -3.64% at the end of 2003 to just -0.03% in August. This could be a side effect of the ‘Bank Holiday effect’ which sees increased numbers of homebuyers looking at moving to areas such as the south coast.
Elsewhere, Londoners and other urban dwellers continued to leave the cities with the West Midlands and North West also seeing the effects of this. The South West and Wales saw an influx of homebuyers.
Demand will see the market through
David Bexon, Chief Executive of SmartNewHomes, commented: “As we expected, this month’s index shows that the new homes market is not crashing into oblivion, but stabilising itself. 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.
“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.”
