Encouraging signs in housing market | moneyfacts.co.uk

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MONEYFACTS ARCHIVE. This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Tim Leonard

Tim Leonard

Finance Expert
Published: 18/09/2009

Optimism appears to be gradually returning to the housing market, after it was revealed the price of new homes rallied in August as a result of a summer upsurge in homebuyer demand.

A monthly rise of 2.2% means the average price jumped to £217,058, more than £4,600 higher than in July, the latest research from SmartNewHomes.com has revealed.

Significant improvements have been noted in the market since May, giving hope to house builders that a recovery might be under way.

However, with doubts still remaining over the availability and affordability of mortgages, caution should remain the watchword for the time being.

Indeed, it is detached homes and town houses that appear to be the most resilient to any decline in price, mainly because securing a mortgage has arguably been easier for those looking to move up the property ladder than for the first time buyer.

"While I am confident that a floor has now been reached for new home prices, I expect them to hold around their current value, and not increase at the rate seen recently in the resale market," said David Bexon, managing director of the property website.

"Perceptions of market improvement have boosted confidence among homebuyers, who are now searching for higher priced homes. However, developers are aware that restricted finance remains a persistent stumbling block to buyers obtaining the mortgage they desire."

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