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News: New build house prices reach fresh heights

The price of a new home has risen by 2.2% over the past 12 months to reach a high of just under £200,000 per unit, according to analysis of a portfolio of 130 current developments throughout the country.

The figures come from independent finance specialist for small housebuilders, Wolsey Securities who say that increasing reservation levels in 2006, spearheaded by the South, are an indication of growing buyer confidence in the market.

During 2005, reservations levels remained steady. Following the usual seasonal slow down in December 2005, the first half of 2006 has seen positive signs in the increase in the proportion of customer reservations across the portfolio. This suggests growing buyer confidence and activity for the market ahead, say the firm.

There is evidence of a South to North ripple effect in market confidence. The South is spearheading activity across the country this year, with reservation levels for released units increasing from 18% in June 2005, to 26% in May 2006. If the South is leading the revival across the UK, it would suggest improvements should be anticipated in Central England and Wales and the North and Scotland as the ripple effect spreads out across the rest of the country.

The number of apartments being built has increased from 54% in January 2005 to 61% this month, while the average size per plot has decreased during the same period. This echoes the government’s planning policy to increase the density of new build development. The increase in the proportion of flats being built has occurred at the expense of detached houses, the proportion of which has decreased by almost a third from 22% of Wolsey’s portfolio in January 2005 to 16% in May 2006.

Mike Ratcliffe, Chief Executive of Wolsey Securities commented: "Two forces are reflected in the breakdown of our current portfolio. On the one hand we see a trend towards apartment-style living. Apartments at accessible prices have an appeal to first time buyers who want to get a foot on the housing ladder. Also, with the increase in people choosing to live alone, be they singletons or divorcees downsizing, quality apartment-style living has become an increasingly popular option."

"The second force at work is the impact of planning policy. The government is demanding greater density more homes on less land most achievable through apartments, least achievable through building detached houses. This is undoubtedly a factor in the overall increase in proportion of apartment units within our portfolio and the resulting trend of smaller average plot size."

"This drive to density is not necessarily market-led and as a consequence has resulted in a state of oversupply of apartment accommodation in certain markets to the detriment of more traditional housing."

"The profile of our portfolio reflects the forces at work, but we are watchful of ensuring the apartment schemes we invest in are not in locations where we consider there is oversupply."

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