This is the third monthly fall in the last five months as the fear of interest rate rises and uncertainty over the market combined with the annual summer slowdown has had its effect on price levels [see graph 1]. Annually, house price growth for new homes fell to 3.7%, its slowest rate of growth this year [see graph 2].
This indicates that the rapid rates of price growth seen in previous years are no longer sustainable and prices are naturally returning to more sensible levels. This news will be welcomed by both the Bank of England and those struggling to afford a property, such as first time buyers.
New homes still in demand
However, despite several interest rate rises and much talk of the future of the market, homebuyers looking for a new home on www.smartnewhomes.com are willing to pay more than ever for their property, as demand prices rose 3.1% over the last three months to £225,669 [see graph 3], up 4.8% on the same time last year.
Graph 3: Demand prices for new homes
South hit hardest – but London stands strong
The UK’s most expensive regions were hit hardest by the recent dip, with the exception of London which surprisingly returned positive results with a 4.1% rise in prices from the previous month. This follows a year of falls in the capital but it still retains its position as the most expensive region in the UK, with an average price of £520,262.
Elsewhere, the South West, South East, East Anglia and West Midlands experienced monthly and quarterly falls. Further north, prices continued to rise, albeit more steadily than in previous months. The property boom in Wales continued, reflecting the large amount of redevelopment taking place around Cardiff and South Wales.
Urban exodus
Londoners and other urban dwellers continued to leave the cities with the largest percentage of homebuyers looking to move out of the capital (-6.58%) and the West Midlands (-2.29%). The North continued to head towards negative migration (i.e. more people looking to move out of a region than moving in) following the North West. Aside from the South West, Wales and Scotland also saw new residents moving in [see figure 4].
Figure 4: Regional migration patterns
David Bexon, Chief Executive of SmartNewHomes, commented: “The slowdown is taking effect on the new homes market and we are starting to see a real fall off in prices following the general annual summer dips in previous months. It is going to be interesting to see how prices behave going into the last quarter of 2004, as consumer demand is still high but housebuilders are anticipating that they will need to adjust their pricing levels.
“In contrast to the doom merchants competing for who can predict the biggest crash, we are being realistic and expecting a further slight drop in the next couple of months, but a positive annual price change at the end of the year of around 5%.”
-Ends-
Notes for editors:
For further information contact:
Katie White / Liz Holloway, The Wriglesworth Consultancy on 020 7845 7900 or email: [email protected]
David Bexon, Chief Executive, SmartNewHomes on 01978 315800 or
More about the New Homes Index
SmartNewHomes’ New Homes Index is a monthly monitor of new homes in England and Wales. Based on both properties and enquiries on the SmartNewHomes.com website, the index records the price of new homes by region and type of property, as well as tracking consumer demand for properties. The Index also tracks migration between regions. By subtracting the number of users based in a region from the number of searches in that region, one gets a net balance that reflects an overall propensity to move out of or move into the region.
