New homes recovery continues with 1.5% pricing increase

Annual growth showed continued improvement, with the rate of decline decreasing for the sixth consecutive month, from -7.5% in October to just -3.7%.

David Bexon, Managing Director of SmartNewHomes.com, said: "This month’s figures represent a big step towards a return to positive annual growth and will be a big confidence boost for both the industry and for potential buyers.

"However, we are unlikely to see dramatic growth in the price of new homes in the short term. Looking to the long term, the industry is wary of the potential impact of difficulties in the mortgage market, particularly for first-time buyers, and ongoing economic uncertainty. Many of the major house builders are therefore focusing on boosting their land banks while land costs up to 20% less than it did at the height of the boom.

"The recent pre-budget report served to highlight the uncertainties that still remain for house builders. The report was heavy on political manoeuvring but offered nothing to the industry in terms of practical help or leadership, serving only to focus attention on the possible impact of a change of government in the spring. Developers are thus likely to continue their cautious approach in the coming months.

"We expect the current trend for slow but steady price rises to continue, and anticipate growth in the price of new homes of approximately 3% in 2010. Given the increased activity and price rises in the resale market, new developments currently offer homebuyers impressive value for money."

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