The value of new build property has increased by 23% in the last year, outperforming the existing property market by 17%, according to research by Alliance Fund.
Analysing data released by the Land Registry, the study found the average British new build now commands £412,051. In contrast, the average existing resale is currently achieving £282,037, having increased by 6% on an annual basis.
According to the Alliance Fund study, as well as outperforming the existing sector by 17% on the annual rate of house price growth, the average new build is currently commanding a 46% house price premium versus the wider market.
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“Although the property market as a whole has stood strong in the face of economic uncertainty, we’ve seen numerous signs that the pandemic property market boom has been starting to wane in recent months,” said Iain Crawford, CEO of Alliance Fund. “This has certainly been accelerated by the turbulence seen across the mortgage sector as the threat of increasing interest rates has caused the cost of borrowing to soar.
“However, when dissecting the market by sector, it’s clear that it’s the health of the regular market that’s deteriorating and the contrast between the new build and existing property market is quite stark, to say the least,” Crawford added.
Alliance Fund’s research ranked Scotland as the top performing area in Britain for house price growth, with the average new build climbing by 29% in value – almost 20% higher than the 10% increase seen across the regular market.
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The new build sectors in the East of England, Wales and the South West have seen house prices climb by 18% more than the rate of growth seen across the existing market. However, the North East is where new homes are currently commanding the largest house price premiums: the average new build in the region is currently valued at £257,371, 74% more than the average existing property cost of £148,327.
In London, new build house prices have climbed by 17% in the last year, according to Alliance Fund’s study – 12% higher than the 5% rate of growth seen across the regular market, with the average London new build commanding an 11% premium.
At £593,168, the average cost of a new home in London remains the highest when compared to the rest of the British new build market.
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“New build values have continued to soar, attracting strong premiums across the board, even in a largely lukewarm London market,” Crawford commented. “This is undoubtedly due to a realisation by homebuyers that they offer a far superior investment and one that is going to hold its value to a far greater extent, even in the event that the property market takes a dip.
“At the same time, many new builds also offer a cost saving, whether that be initially in the form of subsidised stamp duty, or in the longer term as a result of superior build quality and energy efficiency – something that has come to the forefront of the purchasing thought process for many buyers as a result of the cost-of-living crisis,” Crawford added.
By JEROME SMAIL
Source: Property Industry Eye