The average price of a new home fell by 1.2% (£2,724) in June to £225,317, the first fall in values since January this year. Positive growth was recorded on a three-month and annual basis, up 3.2% and 3.4% respectively.
Despite a monthly dip in values, prices remain 3.4% higher than in June 2010, suggesting that the new homes market is recovering year on year and remains resilient in the face of continued economic uncertainty.
Values in the wider property market are fluctuating, with Rightmove and Nationwide showing rises in June, while Land Registry recorded a drop in prices in May. Asking prices for new homes remain consistently below Rightmove's asking prices in the wider market, as developers continue to value homes more realistically than other sellers.
The strongest price growth in July was seen in the North, Yorkshire & Humber and the East Midlands, which saw price rises of 4.6%, 6.2% and 4.3% respectively. The Welsh housing market is still struggling, with new home prices falling 2.7% in June and -3% annually. The Greater London market is showing signs of recovery with a further monthly rise in June, which is helping reduce the annual price fall.
New homes coming onto SmartNewHomes
Conditions are still extremely challenging for developers, with the CML announcing a 14% drop in gross mortgage lending in June and construction insight company Glenigan reporting a 31% reduction in private housing starts in the three months to June. Some developers are cautiously progressing new sites while wider economic conditions remain weak and mortgage finance continues to be restricted.
Commenting on the data, Steve Lees, Director of SmartNewHomes said:
"Most developers are pricing competitively according to local markets, as part of a strategy to sell quickly and focus on the next project. New homes are currently offering excellent value for money, with asking prices consistently beneath those of second hand homes. We are now heading into the summer holiday season when many people put their homebuying plans on hold, so I would expect the market to slow a little throughout July and August before picking up again in September.
"The regional picture is looking noticeably brighter than it was earlier in the year, with only three of the eleven regions showing monthly price falls in June. This suggests that the worst of the price falls may be behind us in the regions, although it may be some time before we see prices in areas such as the North and East Anglia showing a consistent pattern of growth."
To read the latest New Homes Index in full click here.
See Also: New Homes Index (0), New Homes Market (0), Press Releases (0), Property News (0), Mortgage Industry (0), Mortgage Market (0), Property Articles (0)
Date Published: 25 July 2011
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