After several months of looking like recovery was on the way, the UK property market is suffering again with average house prices down according to data from SmartNewHomes.com, the new homes website.
The monthly report released today by SmartNewHomes.com reveals that the average price of a new home in the UK in September 2005 was 255,916, down 5.3% since the same time last year. This is the sixth consecutive month of negative annual price inflation and represents a sharp decrease on last months average price, down 2.3%. Prices are also down on average 2.1% over the last quarter, which is the first quarterly decrease since May 2005.
Regionally, only Scotland, Wales and East Anglia escaped the wider market downturn reporting positive price growth over the last year. London remained the most expensive region of the UK with prices increasing yet further over the last few months. The East Midlands has the cheapest average new home price but despite this remained one of the least popular regions of the UK with more people moving out than moving in. This pattern was duplicated in the West Midlands and London with Scotland, the South West and Yorkshire and Humberside experiencing the reverse trend with an influx of homebuyers outnumbering departures.
David Bexon, managing director of SmartNewHomes.com, says: Although we usually expect house prices to be picking up again after the summer slowdown at this time of year, we have experienced a further downturn in the market. This can be down to a number of factors with not least the pressure on the economy from the global oil crisis, limited consumer confidence and reduced high street spending contributing their parts.
However the demand for housing and indeed new homes is still strong and therefore this months statistics are not likely to become a long-term trend. If the Bank of England responds to economic demands and reduces interest rates further next month, we are more likely to see the market returning to the stabilisation that has been present throughout the year to date rather than further decreases.
The proportion of new apartments for sale increased substantially from contributing around a third of all new homes, 36.7%, two years ago to over one half, 55.8% now. This illustrates how house builders are increasingly turning to smaller units to reach Government criteria for housing density and affordable housing provisions but places additional pressure on the supply/demand imbalance for larger family homes.