New build house prices ‘more positive’

“Comparing average prices in the period June 2010 to May 2011 with June 2011 to May 2012 we see that, whilst there has been some falls, the overall picture looks more positive than when we compared year on year averages last month.

“Pent up demand following the extended Easter break could be a contributing factor to this and the more positive mood of some buyers who are coming to appreciate the benefit that schemes such as NewBuy and Part Exchange can offer.

“Of particular interest is the fact that average prices of detached properties across the UK appear to have improved in response to increased demand for them. One region that has seen this is the South East where detached properties have increased in value by 3% over the last year – a significant rise from the 0.7% decrease reported in last months Index.

“We believe this, to some extent, has been driven by developers who have begun to steer away from the creation of high-density apartments that were popular in years gone by. It is also their ongoing appreciation of the fact that lenders are nervous about the high loan to value mortgages that many hope to obtain on such properties.

“A similar picture can be seen across the UK with flats, apart from in East Anglia, Scotland and Wales, falling in value with prices in the East Midlands, North West and Yorkshire suffering most. In Yorkshire demand for flats and 3 storey town houses has been replaced with demand for 2/3 bedroomed terraces and semi detached new builds with average prices – compared to last months Index – moving upwards to reflect this.

“Across the UK too the average prices of semi detached and terraced properties have improved with the East Midlands, West Midlands and Scotland fairing particularly well.

“So, generally, the picture is not looking too bad and, after a rocky Easter bank holiday period, we are experiencing increased interest from buyers keen to make a move. The growing appreciation of First Buy, NewBuy, part exchange and assisted move schemes will, we hope, also bring further positivity to the market from both first and second time buyers.

“Location and property type, however, continue to be key and, as the market continues to change and economic challenges continue, developers must think hard about where and what they build and how to respond best to the buyers out there.”

Keith Osborne, editor of whathouse.co.uk, says: “It’s really encouraging to see an improvement on the overall picture in
the LSL New Build Index, however small. This corresponds to the positive financial reporting of numerous large housebuilders over the past few months, which has not only seen rises in footfall and sales, but higher average prices in many cases.

“Of course, the detailed breakdown of the LSL/e.surv figures naturally shows quite a bit of variation across the country and
property type. We can still see that the north of England is some way behind southern regions, though the picture in Scotland is very positive.

“It’s possible that there is a correlation between this and the recent resurgence of 100% financing on some developments in Scotland, in the same way that James McAuley sees NewBuy and PX schemes having a positive effect in England. If so, that seems to confirm that improving mortgage finance, in terms of avoiding the need to save huge deposits in these austere times, is the key factor in driving the housing market forward.”

Julian Kenyon – Bellway PLC added: “Demand throughout the spring selling season has remained resilient with visitor levels and reservation rates continuing to outperform expectations.”

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