The fall means that prices are now also 3.1% lower than they were at this time last year – the first negative annual rate of change seen since the housing boom began. This is the result of consistent interest rate rises and market speculation causing a more cautious attitude amongst homebuyers and leading to housebuilders adjusting their selling prices.
The north-south divide in the UK housing market became increasingly apparent last month, as prices fell in all northern regions with only the North West displaying a marginal rise in prices. In contrast, prices in London, the South East and East Anglia all rose after several months of stabilisation, to support beliefs that a slowdown in the market will not be prolonged.
Migration out of urban areas and into more rural ones continued as homebuyers search for a higher quality of life and cheaper properties. However the North West moved back into favour with a positive migration figure after several months of negative rates, demonstrating the resurgence of trendy cities such as Liverpool and Manchester.
The Smart New Homes index also tracks the price consumers are willing to pay for new homes. Generally, there are fewer homebuyers in the market but individually they are willing to pay more for new homes (4.1% more than at the same time last year). However the number of housebuilders competing for these buyers means that they are securing more competitive prices.
David Bexon, Chief Executive of SmartNewHomes, commented: “This latest report on new homes in the UK reflects what is being seen in the wider housing market. Prices could not be sustained at the exceptionally high levels we have seen over recent years and a price correction was needed.
“We are seeing fewer buyers around at the moment, but those looking to move are willing to pay more for a new home. They are finding that it is a buyers’ market and that housebuilders are willing to offer them competitive deals. However increasing demand for homes will help to pull the market back up in 2005. When it becomes evident that the slowdown is only short-lived, buyers will return and prices will begin to rise again. It is interesting to see that in London and the south this is already beginning to happen and we expect the rest of the country to follow suit by the beginning of next year.”
