New house prices are on the up again

While Halifax bank rocked the housing market last week with a report that house prices in Britain had fallen in August for the first time in two years, www.smartnewhomes.com has produced a survey showing that the price of new properties is growing again after a three-month slide.

While Halifax bank rocked the housing market last week with a report that house prices in Britain had fallen in August for the first time in two years, www.smartnewhomes.com has produced a survey showing that the price of new properties is growing again after a three-month slide.

According to www.smartnewhomes.com, a website that specialises in new properties, prices in this category rose by 1.8 per cent in August to an average of £277,445. This was in the face of determined increases in interest rates that were masterminded by the governor of the Bank of England, Mervyn King.

David Bexon, the website's chief executive, said: "Homebuyers have, on the whole, sat tight over the summer months, waiting to see how the market would respond to persistent interest-rate rises and predictions of a mass slowdown. However, many buyers are now returning, following a general stabilisation in the housing market. As a result, the price homebuyers are willing to pay for a new home has continued to increase, by 6.9 per cent over the year. This is the highest rate of annual growth in demand since the end of 2003."

The UK's most expensive regions are still under a cloud. London, the South-East and East Anglia all recorded price decreases of up to 1 per cent from the previous month. But in the North and North-West average new home prices rose to about £200,000. Wales has seen the strongest increases, with property prices up sharply by 8.6 per cent in the past three months. This reflects the large amount of redevelopment taking place around Cardiff and South Wales.

Continued strong demand for new homes in London, combined with a shortage of new developments, led to prices there going 7 per cent above the asking prices for new property. But many Londoners and other city dwellers are still leaving for country addresses.

Mr Bexon said: "This month's index shows that the new homes market is not crashing into oblivion, but stabilising itself. We certainly don't see a need for further rises in interest rates. But demand is still there, particularly for new homes. New homebuyers have demonstrated that they are willing to pay more to secure the property they want and this strong demand will prevent prices falling in the next few months."