New home prices nearing re-sale prices

The average price of a new home fell for a sixth consecutive month in November, taking new home prices to £226,517 – down 2.5% since October, according to smartnewhomes.com. In November, the rate of annual house price growth in the new homes market showed the sharpest decline of 2008, dropping from 9% in October to 11.8%.

Commenting on the data, David Bexon, Managing Director of SmartNewHomes.com said: “New home prices continued their downward progression in November, with annual growth falling to its lowest level recorded all year – now 11.8% down on the average price recorded in November 2007. This is the lowest average we have recorded, and is the first time on our records that annual growth has surpassed -10%.

“Prices are certain to continue falling now into the new year, and I expect sales activity to reach its lowest level ever recorded in December. However, the extent of people waiting on the edge of the market became apparent in November, with the number of visitors to Smartnewhomes.com increasing by 14% the day after the surprise decision from the MPC to slash interest rates by 1.5% early in the month. This supports findings from the RICS November Housing Survey, which revealed a rise in new buyer enquiries.”

Developers drop prices sharply to encourage sales before the end of the year

“In November, the demand price (the price new homebuyers are willing to pay) was above stock price (the price new homes are marketed by developers) for the fourth month running, as developers drop prices further in an effort to try and secure some final sales before the typically slow Christmas period.”

Best value ever seen in new homes market

“New home asking prices are now very closely aligned with overall asking prices in the re-sale market, following a continued decline over the past six months. However, sales within the new homes market have remained relatively steady by comparison, with developers in a position to offer buyers an attractive package of money saving incentives, as well as the security of a new-build warranty and the energy saving potential of new homes.

“People looking to buy a new home will rarely be in a stronger position than they are in now. Developers are pulling out all the stops to get people moving, and while new home prices are likely to remain at their current lows for at least a few months, I do not expect them to fall much further in the medium to long term.”

Accelerated decline in apartment price

“Apartments topped the list of price falls in November, with the average price decreasing by 4% in a month and the annual rate of decline doubling from the previous month. Unsurprisingly it is apartments that are taking the biggest price hit in the present market as they represent the majority of existing stock waiting to be sold. First time buyers should be tracking the market very closely at the moment – those with access to a decent-sized deposit currently have a window of opportunity that is unlikely to appear again.”

New home availablility at year low

“The number of new homes coming to the market reached a year low for the second month running in November, down nearly 50% in total from the beginning of 2000. December is always the slowest month for new property so we are unlikely to see any improvement in availability now until next year.

“While many new developments currently have the green light to progress, developers are understandably focussing their efforts on clearing the decks and shifting existing stock before reviewing their new-build strategy early in 2009.

“In November, the Housing Minister indicated the Government’s intention to stand by its overall housing targets. While two million new homes by 2016 seems an increasingly questionable target, long-term demand in this country still dictates a need for a significant number of new homes to be built, and while both sides will need to adapt to changing circumstances, the Government should be working with developers to do their best to ensure that we are not left with a massive shortfall over the coming years.”

All regions fare worse than last year

“All regions recorded annual price falls in November, with many now showing consecutive double figure reductions. London remains the most resilient region, recording a nominal monthly price increase from October and an annual fall of just 3.5%.”