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Warning of shortage ahead as new home prices slip

Wednesday, 26 October 2011 12:34 PM

The average price of a new homes slipped 0.1 per cent in September and 1.8 per cent in the third quarter of the year, according to the latest index from Smartnewhomes.com.

The falls sent the annual price change for a new home back into negative territory at 0.6 per cent down on a year ago at £221,276.

However, the website is also warning of a looming shortage of new homes. The number of new homes added to the site fell back in September because confusion in the planning system saw fewer developments given planning permission last year and thus fewer completions this year.

The East Midlands (-5.2 per cent) and South West (-4.3 per cent) saw the biggest fall in prices in September and Scotland (+6.2 per cent) the biggest increase.

Prices have risen in 8 out of 11 regions over the last 12 months. However, prices are down over the year in Greater London (-15.5 per cent), East Anglia (-6.8 per cent) and the South West (-2.9 per cent).

Steve Lees, director of Smartnewhomes, said: "As buyer affordability improves, with increased levels of bank lending and a growing number of shared equity schemes coming on stream, a stock shortage threatens to become the biggest hurdle to home ownership."

Smartnewhomes represent 85 per cent of all new homes for sale in England, Wales and Scotland.

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