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New homes prices dip slightly

Annual growth in new home prices stood at +1.0% in March.

Growth would undoubtedly be higher were it not for the continued intransigence of some mortgage providers, smartnewhomes said.

The performance of the sector over the last year demonstrates that the apparent unwillingness of some lenders to offer loans on new homes is not grounded in evidence.

Both the Rightmove and Nationwide indices have risen in the last month. While homebuilders have remained cautious, increased
activity levels among buyers, especially over the Easter holiday, could bring a small boost in asking prices next month.

Many developers see build volumes, rather than prices, as the best indicator of the health of the industry. In that context, the substantial increase in the number of new homes brought to market in recent months is very welcome.

However, the UK is suffering from an acute housing shortage, and the effect of the recent increase will be to limit the rate at which the shortage gets worse. Volumes still need to rise significantly higher before we reach the stage where the industry can start to make inroads to actually reduce the shortfall.

Steve Lees, Director of smartnewhomes said: "The continued price stability in the new homes market over the winter is very encouraging for housebuilders and consumers alike, especially set in the context of the rising number of new homes coming up for sale.

"With activity levels likely to pick up further as the traditional spring selling season gets underway, there is reason to feel optimistic about the year ahead.

"Nevertheless, the mortgage market remains a cause for concern in the industry, particularly given that an interest rate
rise seems inevitable at some point in the coming months. Developers have been conscious of this eventuality for some
time, and so many have chosen to resist the temptation to be bullish on price. This may mean that the effects of a rate
rise could be felt more keenly in the resale market than the new homes market."

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