Interest rate rises 'deterring buyers'

Recent rises in the interest rate have contributed to a reluctance among buyers to enter the property market, leading to a fall in prices of new homes, according to research.

Despite hitting record levels in May, new home prices fell 0.3 per cent in June as buyers "felt the squeeze" of the previous month's rate rise and expressed concern at the potential of more to come, SmartNewHomes.com revealed.

The company also referred to the weather conditions experienced over the past two months, saying that many prospective buyers have been delaying their searches until conditions improve.

David Bexon, managing director of SmartNewHomes.com, said: "With rates
seemingly on the up and the severe weather conditions experienced in June extending well into July, I fear we should prepare for a further fall in price over the coming months.

He added: "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 homeowners are feeling increasingly cautious about taking on any additional debt at such an uncertain time."

Mr Bexon claimed that, alongside existing homeowners, first-time buyers are holding off on a mortgage commitment and waiting for more competitive fixed-rate deals to emerge.

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