SmartNewHomes.com has recorded a second consecutive monthly fall in new home prices in July, as developers continue to reduce prices to meet buyer expectations in a bid to entice further activity in the market.
Across the UK, the average price of a new home was £248,755 in July, down 1.3% on figures for June and down 5.1% since July 2007, when new home prices reached their highest level ever recorded.
However, figures show that the overall rate of decline in new home prices reduced from the previous month and that confidence in the London new homes market improved significantly in July, reflected by a 3.4% monthly price increase. London’s performance marks a reversal in fortunes on the previous month, when prices showed a decline of 3.3%. The SmartNewHomes.com Index indicates that a rebalance of stock, combined with the sharp price drop in June has renewed homebuyer interest in the Capital.
David Bexon, Managing Director of SmartNewHomes.com, said:
“House price growth was not sustainable at the levels recorded this time last year and the 5% annual decrease in new home prices last month shows that the market has undergone a necessary period of correction.
“In our monthly review of the new homes market we measure stock price against demand price, which shows the price developers are marketing their homes, against the amount buyers indicate they are actually willing to pay. This offers a clear indication of where prices need to be. During the peak in new home prices last July, the gap between stock and demand prices was the biggest ever recorded, suggesting that strong, continued price growth was not sustainable.
“However, the gap between these two measures has been closed this July, providing an encouraging sign that new home prices are approaching a level where more people are willing and will be able to enter the market.”
Bexon, adds:
“Despite the current slowdown, the new homes market has continued to experience demand as home buyers realise this currently offers the most attractive route into property ownership, with a range of deals and incentives available to assist them in their purchase. However, we will still need to see lenders relaxing their criteria across the board to really assist buyers back into the market.
“The Government has done nothing to help increase transactions, having recently exacerbated matters further by fuelling hopes of a stamp duty reprieve without putting any firm policy in place. While this could have worked to increase sales, the Government’s indecision has had the opposite effect.
“However, buyers keen to avoid the stamp duty tax but not willing to wait for the Government to act, can take advantage of the numerous offers of stamp duty paid already offered by a wide range of developers throughout the country.”
See Also: Press Releases (379)
Date Published: 19 August 2008
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