Certus Mortgage: Large monthly fall for new house prices

The average price of a new home fell 3.4% in March 2009, following the monthly increase recorded in February, according to smartnewhomes.com’s New Homes Index.

This is the largest monthly price fall recorded since the downturn began in the new homes market in 2007, taking the annual decline above 13% for the second time this year.

David Bexon, managing director of SmartNewHomes.com said: “The trend we are seeing in the new homes market reflects the erratic price fluctuations currently being recorded across the majority of the UK house price indices. While individual figures showing positive monthly growth do not amount to an upturn, the irregular patterns are indicative of a changing market, and we should take this as a positive sign that the rate of house price decline is at least diminishing.

“The level of mortgage availability continues to dictate the number of speculative buyers able to actually make a purchase, and any talk of ‘green shoots’ can only go hand-in-hand with improvements in this area.

“However, evidence is now emerging to suggest that the tide is slowly starting to turn in this department. Earlier in April, HSBC announced it was allocating £1billion to a new range of mortgages with loan-to-values (LTV) up to 90%, and the latest figures from the Council of Mortgage Lenders (CML) showed an increase in the total number of UK house purchase loans.

“The high level of homebuyer interest seen at the start of 2009 has continued into the spring market, and in April the Royal Institution of Chartered Surveyors (RICS) backed-up reports from developers, recording a fifth consecutive monthly rise in buyer enquiries.

“While reports of improved mortgage availability remain tentative, buyers are starting to sense the bottom of the market, and everyone from first-time buyers to seasoned investors are now looking to try and capitalise on competitive prices and historically low interest rates. This resulted in demand price (the price buyers are willing to pay) stabilising in March, following consecutive monthly falls.”