Assetz® News - Rising demand for new homes

Rising demand for new homes

23rd March 2006 |

A report released today has indicated that demand for new homes in the UK is on the rise, in line with a general increase in consumer confidence.

According to the SmartNewHomes website, the average price of a new home in the UK rose by 1.5 per cent last month, reaching £259,900.

In addition to being 0.4 per cent higher than the same time in 2005, this was also the first positive annual price growth for nearly a year, reflecting the strengthening of the property market in the early months of 2006.

One of the most revealing aspects of the report is the statistic that shows how much homebuyers are willing to pay for a new home. Known as the 'demand' price, this figure is now at its highest ever level after a 5.4 per cent increase in the space of just 12 months.

Incredibly, the last month has seen a 3.9 per cent rise in the demand price, supporting claims from industry experts that the market is again in top form.

Regionally, the biggest growth areas seem to be away from London, as the north-south divide seems to narrow further. The price of an average new home in Scotland, Wales, East Anglia and the West Midlands increased by 14 per cent last year, in comparison to marginal price falls in the top priced regions of London, the south-east and the south-west.

Property investment in the north-west has been tipped as one of the most astute moves, however, with prices so far remaining broadly stable. According to SmartNewHomes, this points to significant potential for capital gains, as house prices catch up with other regions in the UK.

Yorkshire and Humberside, the East Midlands and the north are similarly poised for market growth, with the report speculating that all could be 'hotspots' this year.

Another key finding is that detached homes seem to be slowly falling out of favour in the new homes market. According to the report, they now represent only 27.3 per cent of all new homes for sale, which compares to 56.7 per cent for apartments.

It is a trend that has been partially attributed to the government's policy of promoting smaller and denser units, while urban regeneration has also led to a greater number of apartments springing up.

David Bexon is the managing director of the SmartNewHomes company and he is now enthusiastic about the future strength of the market.

"This month's report is the most positive we have seen for a long time with all indicators signifying a substantial upturn in the market. The considerable increase in consumer confidence is the most encouraging indicator that the market is returning to sustainable realistic growth and, if seasonal price fluctuations follow, then average prices could potentially rise by up to another five per cent by the autumn."

If this proves to be the case, investing in brand new properties and off-plan plots may well be a particularly sensible strategy in the coming months.