Strong price growth predicted for 2013 as supply falls short of demand
The average price of a new home in the UK increased by 1.7% in September to £238,849 and is now 7.9% higher than a year ago, the latest report from SmartNewHomes shows.
Prices have risen the most in the east of the country, while other locations have seen prices fall month on month. But overall supply falls short of demand and experts are predicting strong price growth in 2013 as the shortages become more pronounced.
The index shows that prices increased the most in Greater London last month, up 5.5% to £420,565 and are now 9.l2% higher than a year ago. The South East saw the next biggest rise, up 4.4% to £298,537 and are 7.8% up year on year.
The East Midlands, East Anglia and the North West also saw monthly price increases. Prices went up 3.2% in the East Midlands to £197,206 and are 5.3% higher than a year ago. They rose 2.4% in East Anglia to an average of £221,817 and are 4.1% more than September 2011. In the North West they rose 0.4% to £170,012 but are 3.1% down on a year ago.
Prices of new homes have fallen the most in the West Midlands, down 4.8% on August to £159,867 and are also down 3.2% compared to a year ago. They also fell 3.9% in the South West to £214,639 and down 2.7% on September 2011.
Other regions saw small price falls last month. In Wales average new home prices were down 0.1% compared with August to £188,504 but are 3.3% above a year ago. In Yorkshire and Humberside they fell 0.6% to £180,360 but are 0.1% above a year ago. And in Scotland they fell 1.3% to £231,551 and are 1.3% below the average price of September 2011.
The number of new homes available to buy grew in September but was still less than half the number in July. This comes as the Construction Product Association’s Construction Industry Forecast predicts that just 118,000 new homes would be built in 2012, down on 129,370 in 2011.
‘The new homes market was lifted by renewed buyer demand in September, reversing the price fall seen at the end of the summer. The number of new homes coming onto the market also increased in September, as house builders delayed new launches in anticipation of an autumn ‘buyer bounce,’ but supply continues to fall significantly short of that needed,’ said Steven Lees, director at SmartNewHomes.
‘The market is now split along longitudinal lines, with the new homes market in the east more buoyant than in the west. London continues to attract domestic and international buyers which is helping to underpin demand for property in the commuter heartlands of the South East and East Anglia. We expect strong price growth to continue over the long term in these regions and the wider market to follow, as the stock shortage becomes more pronounced,’ he added.