There has been plenty of positive news from the housebuilding industry in recent months, with many reporting rises in both interest and sales. But how do the price of new-build homes stack up year-on year? Are housebuilders dropping prices to grow sales? And, with the UK economy nudging into recession again, are housebuilders building the right units to sustain buyers’ interest?
“The price of new-build detached houses was seen to fall consistently, but not significantly, across the country, with average falls of between 1% and 5% during the period,” says James McAuley from LSL Land & New Homes. “Prices for flats have generally fared more positively, with all regions, save the north-east, north-west and East Midlands, reporting rising prices for flats.”
This month’s index shows how prices for Q1 2012 compare to those in Q1 2010:
Looking across all house types, some regions have withstood the economic and property downturn slightly better. Keith Osborne, editor of whathouse.co.uk, says: “The West Midlands and south-east appear to have experienced the most stability in prices, which is pretty much in line with other indices covering the property market as a whole. The news looks grimmest in three areas, the north-west, north-east and East Midlands, where there has been a drop-off in average new-build prices across the board.
“There is more encouraging news from Scotland, where apartments and semi-detached new-builds – typical first-time buyer home types – have seen impressive increases in price over a difficult period for the industry overall. “ The rise in prices for apartments may be indicative of the correction in supply, after previous significant oversupply of this property type by developers.”
London aside, where the proportion of private sector flats built (which continue to show a rise in average price) is the same as it was at the 2006 peak (86%), the proportion of flats completed nationwide dropped to 30% from a peak of 40%. This readjustment of supply suggests housebuilders are maintaining sales by responding to buyer demand.
Osborne adds: “Overall, figures reflect the stagnation in the economy over the past couple of years. But there are a smattering of positives in there, suggesting it’s not an entirely bleak picture nationwide. It could be a sign that housebuilders are finding rewards where they have altered their portfolio to provide property types that househunters demand.”
Check out the LSL New Build Index here.