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Cost of new-build homes continues to rise

Cost of new-build homes continues to rise

Friday, 25 April 2008 12:00 AM

The price of a new-build property in the UK increased by 0.6 per cent in March, despite falls in the wider market.

This represents the first increase in this type of property since December 2007, and comes amid fears the sector could susceptible to the wider property market turbulence and the mortgage crunch.

Yesterday the UK's largest homebuilder Persimmon announced profits had fallen by 24 per cent year-on-year, with claims building in the sector could be put on hold.

However, developers in the south-west and south-east of the UK are still reporting high demand from buyers who can still afford to purchase property.

According to SmartNewHomes.com the average new-build property in the UK cost £257,430 in March.

All types of property saw prices increase over the month, excluding apartments.

New detached properties now attract an average price of £309,559, up 1.6 per cent from February, and account for 27.1 per cent of the market.

Similarly new-build semi-detached properties saw a 2.8 per cent increase in price to an average of £239,398, while town houses and penthouses saw prices increase 0.6 and 9.4 per cent respectively.

Apartments saw prices fall 0.5 per cent to an average of £227,752, and now account for just over half of the market - 52 per cent.

It is thought this type of property decreased in value as developers offered cut rate deals to investors and first-time buyers amid challenging conditions.

"This month's rise is a strong signal that house prices are likely to show some growth this year but at a much slower rate than last, as fewer buyers come to the market - concerned about finding a competitive mortgage deal and taking on high levels of debt at such an uncertain time," said SmartNewHomes in a statement.

"Confidence in the housing market has been hit by fewer competitive mortgage deals and tighter lending criteria. However, once recent interest rate cuts filter through to the market, the situation will be eased."

London has the most expensive prices for new-build properties in the UK, with an average of £389,146.

The lowest can be found in the north-west, where a new-build property can be picked up for an average of £215,217.