NEW home prices saw the sharpest fall for a year last month, according to website smartnewhomes.com.

In November, new home prices were down 11.8 per cent to an average £226,517 on the figure recorded in November 2007.

The steepest fall has been seen in the value of new apartments – down 14 per cent in a year and now falling at the rate of four per cent a month. The annual rate of decline doubled within the month.

That’s grim news for thousands of investors who bought off-plan in the past couple of years, with the intention of using rental income to cover the mortgage.

There is a danger that many will be in negative equity even before they complete their purchase, and might not be able to go ahead.

Property Week magazine recently reported that investors have defaulted on the purchase of 52 flats in the Leeds skyscraper Bridgewater Place leaving developers facing a £10 milion gap in their expected receipts. Sales have been completed on a further 148 flats in the scheme.

Smartnewhomes.com says that semi-detached homes have dropped 10.7 per cent in a year to £220,709, while detached are down 7.6 per cent to £302,569.

David Bexon, managing director of smartnewhomes.com, said: “New home asking prices are now very closely aligned with overall asking prices in the resale market, following a continued decline over the past six months.

“However, sales within the new homes market have remained relatively steady by comparison, with developers in a position to offer buyers an attractive package of money-saving incentives.

“People looking to buy a new home will rarely be in a stronger position than they are now,”, says Bexon.

“Developers are pulling out all the stops to get people moving, and while new home prices are likely to remain at their current lows for at least a few months, I do not expect them to fall much further in the medium to long term.”

Over the past year, the biggest declines in new homes have been in South-West England (-28.2 per cent); East Midlands (-17.5 per cent); Yorkshire and Humberside (-15.9 per cent); South-East England (-12.7 per cent).

Falls were much smaller in Scotland (-2.6 per cent); London (-3.5 per cent); and North-West England (-5.4 per cent).

In 2009, smartnewhomes.com predicts that fewer than 90,000 new homes will be sold – but cash-rich investors will do particularly well as they take advantage of “hugely competitive prices”.