Average House price hits £260,832 in May

The average price for a new home reached £260,832 in May – the highest average price for a new home ever recorded by the SmartNewHomes.com monthly index.

Fuelled by a buoyant demand for new homes across large areas of the UK and led by strong price growth in both East Anglia and the South West, the second quarter of 2007 has recorded a surge in price growth, with the average price for a new home now exceeding all previous records.

While average new home prices had been edging the £260,000 mark at the end of 2006, a slow start to 2007 had seen prices drop back at the start of the year as buyers remained cautious following several interest rate rises in late 2006.

David Bexon, managing director at SmartNewHomes.com, says: “May proved to be a record month for new homes and while I would expect the impact of May’s interest rate rise to filter through into June’s new home prices, the market has shown a clear indication that the slow start to the year is now behind us.

“The South West and East Anglia have proved new homes hotspots, with average prices up 12.2% and 12.0% respectively over the last year, as buyers increasingly look for a location where they can get more property for their money, and in many cases, a better quality of life.

“The popularity of detached and semi detached new homes is evident in their strong price growth over the last year, while apartments, particularly in London have fallen in price – reinforcing calls for more affordable family homes among the new homes mix.

“Families with young children, those looking to start a family and even those just looking to upgrade are increasingly unable to afford to step up the ladder in London and as a result they are looking to move further and further away from the city.

“When comparing existing prices on our site, those looking to swap a two bedroom apartment in London for a four bedroom, detached home somewhere such as Suffolk in East Anglia could sell their London flat, purchase their new, detached home and still have money left over.

“For those with growing households, this opportunity is just too good to ignore and as a result, I would expect to witness continued outward migration and a slowing of price growth in London as buyers shun the capital for commutable, yet more affordable properties in the home counties and further a field.”