Slowdown in new homes sector

The average price of a new home in the UK increased by 2.7% last month to 268,724, data released reveals.

This is the first monthly increase since August and indicates that the new home slowdown is coming to an end.

Selling prices were down, very slightly, by 0.5% on the same time last year, which indicates that the housing market has escaped relatively unscathed from the threats of a crash in prices.

Aside from the expected slowdown over the festive period, prices look set for a recovery next year.

Demand was also up, with the price homebuyers are willing to pay for a new property increasing for the seventh time this year, up 2.5% on the previous month.

There was a turnaround in price trends for many areas of the UK, with London, the South-East and West Midlands experiencing strong increases in prices reversing previous drops, whilst the South-West, East Midlands and North-West all steadied following long periods of growth in prices.

This turnaround was also seen in migration patterns measuring the difference in the number of people moving in and out of a region.

Both the East and West Midlands saw a lot more people looking to move out of their regions resulting in a drop into negative migration figures of the kind normally seen in areas such as London, the South East and North West.

However each of these regions saw an increase in homebuyers looking to move into the area.

This took the South-East and North-West to amongst the most popular destinations, including the South West, Yorkshire and Humberside, and Scotland.

As well as the continued popularity of rural areas, this represents a search for cheaper city living in regenerated localities such as Manchester and Liverpool.

David Bexon, chief executive of SmartNewHomes, says: ”We have been saying all year that there will not be a crash in the housing market and this report demonstrates that the slowdown of the last few months was just that, and not the start of anything more catastrophic.

“The evidence shows that the regions that tend to lead the rest of the country in their price activity patterns, i.e. London and the South-East, are bouncing back after several months of negative price corrections, combined with the continuing demand for new homes, this makes me confident that 2005 will bring further growth in the new homes market, albeit at a steadier rate than we have seen in recent years.”