DEVELOPERS have been reducing prices of new homes to meet buyer expectations in a bid to encourage more activity in the market.

Across the UK, the average price of a new home in July was £248,755, down 1.3 per cent on June and down 5.1 per cent since the same period last year, when prices hit their highest level ever recorded.

David Bexton, managing director of SmartNewHomes.com, said: "House price growth was not sustainable at the levels recorded this time last year, and the five per cent annual decrease in new home prices shows that the market has undergone a necessary period of correction."

He believes there are now encouraging signs that new home prices are approaching a level where more people are willing and able to enter the market.

Mr Bexton said: "Despite the current slowdown, the new homes market has continued to experience demand as homebuyers realise this currently offers the most attractive route into property ownership, with a range of deals and incentives available to assist them in their purchase.

"However, we will still need to see lenders relaxing their criteria across the board to really assist buyers back into the market."