Commenting on the data, David Bexon, Managing Director of SmartNewHomes.com said:
“New homes prices decreased significantly in September, with figures for annual growth taking a dive from the previous month, following a month of intense negative sentiment in the financial sector. Developers continued to focus on shifting existing stock, reducing price expectations further towards a level where more buyers are able to enter the market.
“New home buyers can now enjoy excellent value for money on sale prices, boosted by added incentives such as help with deposits and legal fees paid, as well as the new stamp duty threshold. If the Government’s rescue plan for the banks and the recent cut in interest rates works to free-up some much needed mortgage finance, new home buyers will be in a strong position to benefit, as the huge pent up demand resulting from the current lack of housebuilding moves further and further away from current Government targets.”
Developers drop prices sharply to encourage potential buyers
“In September, the demand price (the price new homebuyers are willing to pay) rose above stock price (the price new homes are marketed by developers) for the second time, as developers adjust their prices to meet the expectations and affordability of those who currently have access to mortgage finance.”
New homes price dip offers opportunity as Government steps in
“Asking prices, reflected in the SmartNewHomes.com and Rightmove indices will continue to exceed achieved sale prices and figures for mortgage approvals in the re-sale market as a whole, even if the availability of mortgage finance improves. The whole property market has been strangled by the lack of mortgage finance, but following the injection of Government funding into three of the UK's major banks, the mortgage market is expected to open up again with renewed liquidity, meaning more deals available to homebuyers. New homes in particular will see their value increase as the restricted output from developers in the current climate pushes demand above supply once again.”
Penthouses record upward turn but prices pulled down across the board
“All property types except penthouses continued to record annual price falls in September, although the exceptionally low availability of penthouses essentially puts them in their own category. Apartments recorded the smallest annual price fall out of the remaining property types. Lower prices and financial incentives, such as stamp duty paid, have offered some reprieve for apartment buyers – this is supported by an increase of these properties coming to the market in September (the highest number since June 08).”
Development continues but new home availability still under threat
“The number of new properties coming to market remained low in September despite recording an increase on the previous three months. There are a number of developers still progressing schemes, but these are likely to become even fewer in the coming months, unless we see a dramatic change in the mortgage market, as lack of finance continues to restrict developers’ off-plan sales success.
“The Government needs to build in excess of 200,000 new homes per year to reach its target of 2 million homes by 2016, but RICS states that only 66,220 have been built this year to date. The sharp reduction in the output of new homes this year, and expected shortfall over the next two or three years, presents excellent opportunities for new home buyers. It will be some time before the housebuilding industry is back up to capacity, and this restriction in output will place a premium on new home prices in years to come.”
London bucks the trend with annual price growth
“All regions around the UK recorded negative annual and monthly house price growth in September, with the exception of London, where new home prices rose 6.1% annually and 3.2% since August. However, it is still likely that the majority of the UK will continue to experience marginal falls until the end of the year.
“The South West saw the largest monthly improvement in September, recording an increase of 6.3%, but the average price there remains significantly down on a year ago.”
