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Downturn in new homes market

7th December 2005 | back to article listings BACK    print this article PRINT

The current trend of building flats and apartments rather than houses has caused a slight downturn in the new homes market in the UK.

According to monthly data from SmartNewHomes.com, average prices across the UK are in fact down 4.8 per cent from last year, although month-on-month prices do indicate an increase of around 0.2 per cent.

The research has revealed that around 54.7 per cent of the new homes available in the UK are now apartments. Only 30 per cent are detached homes which represents an absolute reversal of the situation three years ago when just 33 per cent of new homes were apartments.

The principle effect of this continuing trend is that apartment prices have seen a disproportionate price decrease of 15 per cent since 2003 in comparison with the general market decrease of five per cent. This could provide investors with an opportunity to buy property more cheaply.

Significantly, the statistics are not reflected by customer opinion, with houses remaining more popular than apartments across the country. SmartNewHomes.com attributes this discrepancy to the restraints on homebuilders that have led to an enforced trend of building smaller units.

"With limited greenfield sites made available for development and tight constraints on housing density, homebuilders have been forced to adjust their mix of property types but demand has not shifted in the same way," said David Bexon, managing director of SmartNewHomes.com.

The necessary consequence is that the new homes market is seeing prices decreasing at a greater rate than the more general market because of the surplus of unwanted apartments. While this could be useful for investors in the short-term, it is feared that a prolonged dip could hit rental yields.

Research from Linden Homes, however, has suggested that house prices will begin to rise again in 2006.

"I expect to see sale sold signs shooting up with the daffodils as vendors come out of hibernation with more realistically priced homes, determined to shift properties that have stuck during the uncertainty of the last year," said Philip Davies, chief executive of Linden Homes.

"Buyers who decided to "wait and see" in 2005 as a result of the feverous speculation of a housing market crash will have grown impatient and be determined to press ahead with their purchases," he continued.

The pre-Budget speech also indicated that there will be an overhaul of planning regulations in the near future which is likely to reduce some of the current building prohibitions. It is believed that this move will play a significant role in the rejuvenation of the new homes market.


This is a press release by Assetz also available at http://press.assetz.co.uk/articles/2371.html. Alternatively, please see our full press release archive.

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