According to the latest new homes index from SmartNewHomes.com, prices took a fall in June as severe weather conditions and the impact of May’s interest rate rise deterred buyers from the market...

Despite achieving record prices in May, the average price of a new home fell 0.3% in June as buyers felt the squeeze from the previous month’s rate rise and expressed a renewed fear of more to come.

In addition, the freak weather conditions experienced over the last two months, which resulted in the wettest June on record, haven also taken their toll, as many new home buyers have delayed their search for a new home until conditions improve.

Graph 1: Average new home price

David Bexon, Managing Director, SmartNewHome.com said: “With rates seemingly on the up and the sever weather conditions experienced in June extending well into July, I fear we should prepare for a further fall in price over the coming months.

“The recent flooding has devastated thousands of homes across the country, with the Department for Environment Food and Rural Affairs estimating the number of homes affected currently exceeding 20,000. For home owners in these areas, any plans for moving will be well and truly on the back burner.

“In addition, fear of another rate rise is still rife among the home owning public, with July’s rise only fuelling further concern. A growing number of existing home owners are feeling increasingly cautious about taking on any additional debt at such an uncertain time and many first time buyers are holding off, waiting for more appealing fixed rate deals before committing to their first mortgage.”