Price growth of new builds slows again

December 21, 2017 / Isla MacFarlane
Price growth of new builds slows again

In the year to end November 2017 new build house prices rose on average by 4.8% across the UK which is down on last year’s figure of 6.1%, according to the LSL New Homes Index.

“If Greater London is taken out of the calculation and we take a crude average of the remaining regions, then the change is less pronounced with average house price growth of 4.2% compared to a figure of 4.4% last year,” the index said. “Looking across the regions it can be seen that the roll out of the housing market recovery has continued and some sustained price rises are now evident in all regions.”

However, whilst all regions are now seeing some evidence of house price growth, the recent hot spots of Greater London, the South East and East Anglia are now seeing a slowing rate of growth. In line with other commentaries, Greater London is no longer the leading region.

Indeed, the relatively high new build price change figure may be at odds with other indices due to the effect of Help to Buy and the distribution of new build activity in this region. The South East, South West, East Midlands and East Anglia and Greater London still show the strongest growth rates and these regions neatly define the South of the country. But all regions are now in positive territory and the potential for growth, when viewed through the window of average property prices relative to earnings, lies in the North of the country.

Business Insider talks of the recent RICS survey that highlights the growing skills shortage that is affecting the housing sector. A growing number of surveyors believe that the skills shortage is influencing the ability of the sector to grow its output. A difficult issue given the government’s ambitious housebuilding targets.

The problem has a few faces, with an ageing workforce of home grown skilled labour, combined with Brexit uncertainty, and a weak pound making the UK a less attractive place for overseas construction workers to come to. The Farmer Review of the UK construction labour model, commissioned by the Construction Leadership Council, at the request of the Government, in 2016 suggests that the sector could benefit from modernisation. The approach to the labour force within the house building sector is somewhat established and it is possible that skills shortage issues may worsen before they improve.

UK inflation stands at 3.1% which is a near six-year high and it has just been reported by the Thomson Reuters/Ipsos Primary Consumer Sentiment Index that British consumer confidence slid back in December to its second weakest level in nearly four years.

But with all the uncertainty around the economy and sector we can be sure that people will need to keep moving home. And in the HBF 2017 customer satisfaction survey there are two standout results that are worthy of mention. When asked ‘If you were to buy another property, would you buy a newly-built or newly-converted home again?’ 91% of respondents said ‘yes’.

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