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New-build property prices continue to fall

Wednesday, 20 August 2008 12:00 AM

The average cost of new-build property has continued to fall across Great Britain, as developers continue to reduce prices to meet buyer expectations in a bid to entice further activity in the market.

Across the country, the average price of a new home was £248,755 in July, down 1.3 per cent on recorded figures for June and down 5.1 per cent since July 2007, according to findings from SmartNewHomes.com.

The level from July 2007 was the highest figure ever recorded for new-build properties.

"House price growth was not sustainable at the levels recorded this time last year and the five per cent annual decrease in new home prices last month shows that the market has undergone a necessary period of correction," explained David Bexon, managing director of SmartNewHomes.

However, figures show the overall rate of decline in new home prices reduced from the previous month and confidence in the London new homes market improved significantly in July, reflected by a 3.4 per cent monthly price increase.

London's performance marks a reversal in fortunes on the previous month, when prices showed a decline of 3.3 per cent.

Furthermore, the SmartNewHomes index indicates a rebalance of stock, combined with the sharp price drop in June has renewed homebuyer interest in the capital.

"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," continued Mr Bexon.

"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," he added.

"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."



Chris O'Toole

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