© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
The average price of a new home fell in September by £2,886, down 1.1% since August. The annual fall of 0.1% is well below falls previously experienced at this time of year and is likely to be due to August’s interest rate rise. Despite this, the price buyers are willing to pay has continued to rise, suggesting that buyers are cautious but confident in the future. Activity is predicted to pick up in the final months of 2006.
The Bank of England’s decision to hold interest rates at 4.75% in September and October was good news for the consumer. The level of first time buyers dropped in September following the rate increase in August.
Average house prices are now 4.3% higher than they were a year ago, the fastest year on year growth for two years. However, the national average trend, over the last six months, indicates a consolidating market.
Apartments are the only property type to experience a growth in price over the last month, yet they remain the most affordable property type. Families unable to afford a house are looking to larger, three and four bedroom apartments. More developers are looking to address this by building more of this type of apartment.
London is the only area in the UK where the average price of a new home exceeds £400,000, with prices up 12.1% since this time last year. Despite this, London prices fell 5.2% from August to September. Wales, the South West and the West Midlands, were the only areas to experience an increase in price over the same period. In most other regions supply has outstripped demand.
Generally, the volume of property coming to the market over the last six months is half of that in the same period over the past two years.
Future changes in house prices are dependent on wage inflation and the cost of borrowing. It is the latter that will prove critical in house price movements, as interest rates may need to be raised to bring inflation under control. Borrowers are increasingly fearful that low levels of interest rates will not hold. The number of borrowers choosing five year fixed rate loans has doubled since August, to 16% of all mortgages arranged. The total number of fixed rate mortgages has crept up to 92% of all mortgages taken out, the highest this year.
Security is the number one priority for homebuyers searching for an apartment. The added security of apartment living, including measures such as underground parking, gated access and videophone entry systems, ranked high on the homebuyer’s wish list.