In the year to end July 2017 new build house prices rose on average by 5.5% across the UK which is unchanged on last year’s figure, according to the LSL New Build Index.
If Greater London is taken out of the calculation and we take a crude average of the remaining regions, then the average house price growth is 4.3% compared to a figure of 4.0% last year. In common with other indices, we are seeing a ripple effect as the heat has now come out of the London market and a gentle price wave moves out across the regions.
But the gradual decline in household incomes and general economic uncertainty seem to be creating a cautious environment. Even the prospect of continuing low interest rates is not generating buyer activity at anything like the levels seen in the run up to the market crash a decade since.
In recent weeks, and not withstanding a government denial, there has been speculation that the government may ditch or taper the Help to Buy Scheme before its 2021 end date. It has been suggested that 30% of sales may be accounted for by the scheme and that build volumes may have risen 15% because of it. But whatever the truth, housebuilders share prices were knocked as a result of the speculation.
“A few months since the HBF updated its results on the new build customer satisfaction survey that it has been running for around 12 years now. The survey finds that around 17 out of 20 new build buyer (respondents) would recommend their builder to a friend and 9 out of 10 would buy new build again. There can’t be many other market segments that see such loyalty,” said the LSL New Build Index.
“The data suggests that we have a product that customers like but some clouds are on the horizon. Perhaps the industry needs to start planning for the future anyway, by selling the benefits of new build to those that are not eligible for Help to Buy?”