The year's interest rate rises appear to have taken effect on the new homes market, according to new research.
SmartNewHomes.com saw a significant slowdown in both activity and prices with the average price of new property dropping.
July 2004 witnessed a fall of 0.6 per cent to £276,442, which represent only a 4.9 per cent increase on the same time last year rather than recent 12-monthly increases of over 6 per cent.
The new figures come hot on the heels of yesterday's MPC decision to raise interest rates by another quarter of a per cent.
SmartNewHomes.com now feels many buyers are being scared off from entering the market by rising interest rates.
The chief executive of SmartNewHomes, David Bexon, commented: "This month's index clearly shows that the Bank of England's tactics to slow down the market are working and taking effect on new homes as well as on the general housing market."
He added: "Not only are we seeing falling prices, but homebuyers are running scared from the consistent rate rises and dropping out of the market."
Recent reports also claim that the number of buyers is decreasing. However, Mr Bexon concluded by saying: "We know the demand is still there for new homes which means that far from crashing into oblivion, the market in the next few months will remain steady and return to more sensible price levels."DeHavilland Information Services plc