Both uncertainty and reduced supply have stifled the growth of house prices in the UK, but it appears that the prices for the new build market will fare better than those of existing properties.
New build prices increased an average of 5.5% across the country in the year to end May 2017, which is a marginal decrease over the 5.6% reported last year. If Greater London is eliminated from the equation, new build pricing shows positive growth. The remaining regions reveal an average price growth of 4.3% compared to last year’s figure of 4.0%.
According to the LSL New Build Index, these new builds are defying a disconcerting trend. Prices overall were at a third consecutive monthly decline, something that has not been seen since 2009. Annual growth of house prices fell to 2.1%, providing additional evidence that the housing market is slowing down.
A representative for NSL Land & New Homes said that the new build market clearly offers an alternative to existing property, which can inspire uncertainty over future maintenance costs. Prominent housebuilders continue to report strong advance orders, and this confidence has manifested in the number of starts during the first quarter of this year.
In the meantime, property prices on the whole have slowed down in the face of a less energetic economy. Nationwide chief economist Robert Gardner said that this provides further potential evidence that the housing market’s momentum is decreasing. He added that the trend could be indicative of a wider slowing-down in the household sector, although data results are mixed in this regard.