Following the announcement of Government plans to shake up the housing market, the house building industry has once again come under the spotlight. In its latest New Build Index, LSL considers what the plans are and highlights again the changing regional picture in terms of new build prices.
James McAuley, Director of LSL Land & New Homes commented: “Although it was hoped that the Government may introduce further measures, such as a three year ‘holiday’ for affordable homes, the new plans recently announced should go some way in helping boost activity and, we believe, should to be welcomed.
“At the moment one of the main obstacles to house builders is the sheer lack of buyers who are in a position to buy due to their ongoing difficulties in raising deposits and mortgage finance. Hopefully the reported success of NewBuy and the extension of FirstBuy will help but, in the meantime, it’s clear that some developers have had to respond with price reductions - with some regions now better placed than others.
“Comparing average prices in the period September 2010 to August 2011 with September 2011 to August 2012 we see that only three regions are seeing price rises across all property types namely East Anglia, the West Midlands and the South East. In contrast Greater London, the North East, North West and Yorkshire and Humberside have generally seen price falls. An indication, possibly, of the steps developers are having to take to attract new customers.
“In terms of popularity terrace properties look, in some regions, to be particularly sought after as prices in the West Midland, Wales and Scotland suggest –increasing by 5%, 9.1% and a staggering 16% respectively.
“Only time will tell what impact new Government plans will have to future prices but hopefully with the relaxation of planning rules, the extension of FirstBuy and, of course, the fact that developers will have access to capital more easily – we’ll see a more positive picture in the future. Until then, however, we hope that mortgage lenders will play their part in kick starting the market and make credit available, not only to first time buyers, but also the wider market.”
Keith Osborne, editor of new homes portal whathouse.co.uk, says: “Comparing these figures to last month’s, there seems to be a settling down of regional markets – there haven’t been many dramatic changes from positive to negative, or vice versa. This would suggest some sort of stability, something which is worth monitoring over the coming couple of months. It will be interesting too, to see whether the dramatic 16% increase in terrace home prices in Scotland is an anomaly or whether that heralds a longer-term trend north of the border.
“The launch of MI New Home in Scotland as a counterpart to England’s NewBuy scheme has been widely welcomed. Though recent figures suggest that first-time buyers have it a little easier in Scotland, it is a common theme with the house builders I see and talk to that without some sort of significant financial assistance from family, government or developers, meeting the lending criteria to buy a first home is incredibly difficult for anyone on an average salary. Let’s hope the Funding for Lending initiative leads to many more affordable mortgage options at the bottom of the market."
Graph shows average new homes prices in the period September 2011 to August 2012 and % variation over same period 2012/2011.