Price of a new home rises nearly 3%

Fears about the low supply of housing have led to a surprise monthly rise in the price of new homes.

The average price of a new home rose 2.8% in February 2009, up from £221,598 in January to £227,893 - the first monthly increase since May.

Decreasing availability of stock and intense buyer interest at the beginning of the year were behind the rise, recorded in the New Homes Index.

SmartNewHomes.com, which operates the index, said that it was too soon to call the bottom of the market, however, with further price falls – albeit marginal – expected over coming months.

David Bexon, managing director of SmartNewHomes.com, said: “Many of the UK house price indices are now recording erratic fluctuations in their monthly data.

“One month's worth of positive growth does not indicate an emergence from the downward price trend; however, renewed interest from homebuyers and investors at the start of 2009 has put the brakes on price reductions from many developers, and resulted in more positive pricing for new homes coming onto the market.

Bexon added that buyers showed a renewed willingness to enter the market in the first two months of the year.

The price bounce recorded in February occurred across the regions, with the biggest rises noted in the South.

Apartments and penthouses were the two sectors to experience a monthly price rise, up 6.3% and 6.8% respectively.

Reports of improved mortgage availability are emerging, but Bexon said these were tentative and that it would be “some time before we see this leading to any form of significant stability”.