New home buyers benefit from record price falls

The average price of a new home fell 2.1% in January 2009, following a price freeze at the end of 2008. The annual decline of 13.1% is the largest year-on-year price fall recorded by SmartNewHomes.com, making new homes more affordable than ever. Someone looking to buy a new semi detached home now could be paying over £26,000 less than they would have just a year ago, while those looking to buy an average new apartment will typically be paying £33,000 less.

Commenting on the data, David Bexon, Managing Director of SmartNewHomes.com said: “The rate of decline in new home prices picked up pace again in January, following a virtual standstill in December. The latest annual price fall of 13.1% is the largest we have ever recorded. Developers are now marketing homes at some of the most affordable prices seen for over three years.

“This is undoubtedly one of the best ever times to buy a new home. While limited credit availability remains a stumbling block for many, there are still routes into homeownership for those looking to buy new in today’s market, with the record price lows currently being experienced and a vast number of developer incentives still on offer.

Developers look to capitalise on early 2009 activity

“Developers moved quickly at the start of the year with further price cuts and a continued plethora of incentives to tempt those buyers who had held off entering the market during the Christmas/New Year period. Developers and estate agents alike have already reported an increase in enquiries from speculative buyers in January, suggesting that there are still people out there looking and willing to buy at the right price and under the right circumstances. This is where new homes have a real advantage over the re-sale market, with access to a host of packages from part exchange to shared equity, all aimed at enabling buyers in today’s market.

“In the re-sale market, many agents still appear to be struggling to manage some vendor’s price expectations and to convince them to put their home on the market at an achievable price. In contrast, developers are acutely aware of the lengths required to attract buyers in today’s climate and are already pricing their homes realistically for a sale.

Lack of supply set to drive future price growth

“Overall output from the new homes market was severely restricted, particularly in the latter half of 2008, and this will inevitably take its toll on future availability. There is no doubt that we are going to fall a long way short of Government new home targets this year. While it may take a while for the full impact of this new homes shortage to be felt, ultimately it will ensure a return to strong new home price growth, albeit at a more moderate rate than the unsustainable levels experienced in 2007.

Families to be hit first by lack of supply

“Apartments continue to show the largest annual price decline, as developers look to tempt investors and shift stock quickly, particularly across high density schemes.

“The small monthly increase in prices recorded for detached homes is possibly an early indicator of the ever worsening shortfall in supply of family property in the new homes market – a shortfall which already needed to be addressed before the current downturn.

Surge of new property in January

“January saw a burst of activity, with the number of new homes put on the market surging to levels not previousy seen since April 2008, as developers looked to capitilise on the renewed interest from buyers at the start of the new year.

“The majority of UK regions recorded continued monthly price falls in January, led by Yorkshire and Humberside, which recorded a monthly pricefall of 4.8%.”