New home year-end price freeze

The average price of a new home recorded only a marginal monthly decline in December, falling to £226,409 – down less than 0.05% since November, according to smartnewhomes.com.

In December, the decline in new home annual price growth decreased for the first time since March, although prices were down significantly for the year as a whole at -11.6%.

Commenting on the data, David Bexon, Managing Director of SmartNewHomes.com said: “New home prices levelled off in December, with only a nominal fall recorded from the previous month. The rate of annual price growth recovered slightly from November, but the overall decline in new home prices recorded in 2008 remains significantly high, surpassing -10% for only the second time on our records.

“However, the decline in new home prices over the past year as a whole was less substantial than the downturn recorded in the re-sale market, with certain parts of the country reporting only very marginal falls in developer asking prices.”

Steep decline in asking prices comes to a halt in December

“Having dropped expectations significantly in previous months in a bid to boost end of year sales, developers put a halt on price cuts in December. With demand price (the price new homebuyers are willing to pay) having wavered very little over the past few months, hacking asking prices further before the typically slow Christmas period would have had a negligible effect.”

New home appeal will sustain their premium

“While new home and re-sale prices showed a parallel decline in the second half of 2008, new homes continue to be marketed at a higher value than re-sale property. Developers are in a unique position to offer an appealing package to home buyers in the current market. Not only will they do everything possible to facilitate the moving process, including significant financial assistance and part-exchange, but new homes also offer greater peace of mind for owners. As well as major savings on home improvements when buying new instead of re-sale (up to £22,000 according to the New Homes Marketing Board), ten year warranties and greater energy efficiency are facets that should not be underestimated in these uncertain times.

“Although I expect new home prices to continue falling alongside re-sale into mid 2009, I do not believe the decline will be as sharp as some are predicting. The restricted output resulting from developers mothballing schemes will impact significantly on the supply of new homes, cushioning prices and possibly leading to some recovery in late 2009, as the current pent-up demand reaches its highest point.

“Signs are also positive for renewed competition in the mortgage market this year. HSBC has already introduced its lowest ever mortgage rate, and the Government’s new £100bn mortgage guarantee scheme should help to stimulate the banks’ overall willingness to lend.”

Developers tempt families back to the market with competitive year-end sales

“The majority of property types recorded lesser monthly reductions in house price growth in December, with apartments falling only 0.9% from the previous month.

“The exception was detached homes, where the rate of monthly decline accelerated. Sales of family homes were hit heavily in the latter part of year, as many people opted to sit tight until the New Year. As a result some of the prices available on larger homes toward the end of 2008 were hugely competitive. However, the current lows seen on detached new build property are unlikely to last very long, and these will be among the first new homes to command a higher premium as supply runs short.”

Lowest number of new homes on record

“The number of new homes being brought to the market is naturally at its lowest in December, regularly falling by 40-50% from the previous month. While the figure for December 2008 is the lowest we have ever recorded, relatively speaking it is not as low as some may have expected it to be. In fact, it is only fractionally down on figures for December 2007.

“The majority of new supply came from the South East region, where demand for housing will remain at its highest regardless of the tight credit conditions.”

Scotland proves most resilient

“The majority of regions recorded nominal price growth in December as many developers froze the price reducing activity seen in previous months. Scotland’s new homes market was less affected by events in 2008 than many regions of the UK, recording only small annual price falls at certain points throughout the year and ending the year 2% up on 2007. Scotland’s resilience has been enforced by figures from the re-sale market, which show a far lower decline in average house prices than the rest of the UK.”