New build house prices rise more quickly than existing properties

October 24, 2019 / Isla MacFarlane
New build house prices rise more quickly than existing properties

New build house prices are rising by a greater percentage than existing stock, according to a new analysis by Stone Real Estate. Over the last 10 years, new build house price growth has outperformed existing stock in nearly every region in the UK – in some places, by as much as 25%.

The new build ‘price premium’ has been well established by the press, with buyers often paying up to 15% more for a new build property. The higher price is often justified because of the lower running costs that come with a new home. However, it seems new build homes could be a superior investment, with the initial premium easily recouped in increased value.

Research from new build specialist Stone Real Estate found that between 2014 and 2019 UK new build prices have risen by 27% compared to 22% for existing stock, a difference of 5%.

There’s a big difference between the two in Wales, where new builds have risen by 26.5% compared to 18.3% with existing stock. There’s also a difference of 6.9% in Scotland; 5.9% in England; and 5.7% in Northern Ireland.

The difference is more pronounced in some regions, with new build prices rising by 26.1% in the City of London compared to 13.6% for existing property, a variance of 12.5%. Similarly, new build prices have inflated by 10.6% more than existing stock in Redbridge, London; 9.3% more in Oldham, Greater Manchester; and 9.1% more in Merthyr Tydfil in Wales.

If you compare new build prices with existing stock in the past decade, it’s a similar story. Between 2009 and 2019 UK new build prices rose by 46.9%, compared to 41.5% with existing stock, a difference of 5.4%.

Over the past decade the biggest difference is in Scotland, where new build price growth is 25.4% and for existing stock it’s 14.6%, a difference of 10.7%. Once again there’s a big difference in Wales, where new build prices have increased by 8.1% more. Meanwhile new builds have risen by 6.7% more in England.

Focusing on smaller regions, the biggest gap remains in the City of London, where new build prices have inflated by 124.8% in the past 10 years compared to 108.2% for existing stock – a 16.6% difference.

New build growth was 16.5% higher in Three Rivers, Hertfordshire; 15% higher in Folkestone & Hythe, Kent; and 14.2% higher in East Lothian, Scotland.

Since the EU Referendum vote of July 2016 new build prices have grown by almost 4% more across the UK, with a rise of 9.9% compared to 6% for existing stock. In London, the price of new builds has increased by 1.6% since the vote, while existing property prices have actually dropped, down -2.1%.

By area, Blackburn with Darwen saw the biggest percentage increase in new build prices compared to existing properties, after seeing new build prices rise by 17.8%, 6.4% more than the 11.4% recorded for other homes.

Behind that is Oldham in Greater Manchester, with a gap of 5.3%; then Barrow-In-Furness, Cumbria with a difference of 5.2%.

Unusually, in Northern Ireland new build prices only increased by 6.94% compared to 9.45% for existing stock between July 2016 and 2019 – so very occasionally, new build doesn’t always perform better.

Founder and CEO of Stone Real Estate, Michael Stone, said: “While new build homes often come under fire due to the price premium involved, it’s abundantly clear that they have proven to be the best bricks and mortar investment option over the past 10 years when it comes to holding value.

“Despite the bumpy ride of Brexit uncertainty over the last few years, new build property values have increased in every region of the UK, while existing stock has failed to keep pace, or in some cases, even seen a decline.

“This is largely due to build quality and condition and with new builds you can be sure the property is modern, structurally sound and energy-efficient – all features a buyer will look for.”

Over the last decade – 2009 to 2019
Location Average New Build Price Growth (2009-2019) Existing Price Growth ( 2009-2019) Difference – NB and Existing % growth
City of London 124.77% 108.17% 16.60%
Three Rivers 95.12% 78.58% 16.54%
Folkestone and Hythe 67.69% 52.72% 14.97%
East Lothian 45.29% 31.11% 14.19%
Fife 29.78% 16.60% 13.18%
West Lothian 39.53% 26.54% 12.99%
Richmond upon Thames 89.17% 76.19% 12.98%
Bracknell Forest 77.14% 64.61% 12.54%
King’s Lynn and West Norfolk 57.29% 44.78% 12.51%
Ashford 67.70% 55.20% 12.50%
UNITED KINGDOM 46.87% 41.48% 5.39%
ENGLAND 53.25% 46.60% 6.65%
WALES 33.38% 25.25% 8.13%
SCOTLAND 25.38% 14.63% 10.75%
NORTHERN IRELAND -2.00% -5.04% -3.03%
NORTH EAST 12.52% 3.99% 8.53%
NORTH WEST 31.37% 24.30% 7.07%
YORKSHIRE AND THE HUMBER 31.36% 23.65% 7.72%
EAST MIDLANDS 52.96% 41.97% 10.99%
WEST MIDLANDS 42.73% 38.03% 4.71%
EAST OF ENGLAND 71.93% 62.55% 9.38%
LONDON 86.81% 80.80% 6.00%
SOUTH EAST 65.99% 58.45% 7.54%
SOUTH WEST 47.16% 41.79% 5.37%
Over the last five years – 2014 to 2019
Location Average New Build Price Growth (2014-2019) Existing Price Growth ( 2014-2019) Difference – NB and Existing % growth
City of London 26.11% 13.60% 12.51%
Redbridge 45.00% 34.39% 10.61%
Oldham 27.92% 18.61% 9.31%
Merthyr Tydfil 27.36% 18.24% 9.12%
Maldon 49.24% 40.26% 8.97%
Thurrock 54.70% 46.09% 8.61%
Barrow-in-Furness 30.00% 21.40% 8.60%
Blackburn with Darwen 27.45% 18.87% 8.58%
City of Glasgow 31.00% 22.60% 8.50%
Maidstone 36.83% 28.51% 8.33%
UNITED KINGDOM 27.00% 21.99% 5.01%
WALES 26.47% 18.30% 8.17%
SCOTLAND 20.00% 13.13% 6.87%
ENGLAND 29.18% 23.33% 5.85%
NORTHERN IRELAND 30.84% 25.09% 5.75%
EAST OF ENGLAND 39.20% 31.91% 7.29%
NORTH WEST 27.03% 19.79% 7.24%
EAST MIDLANDS 33.17% 26.05% 7.12%
NORTH EAST 13.09% 6.21% 6.88%
YORKSHIRE AND THE HUMBER 24.39% 17.53% 6.86%
SOUTH EAST 31.84% 25.52% 6.33%
SOUTH WEST 28.44% 22.50% 5.94%
WEST MIDLANDS 30.74% 24.85% 5.89%
LONDON 25.30% 20.57% 4.74%
Since the EU Ref – July 2016 to 2019
Location Average New Build Price Growth (July 2016-2019) Existing Price Growth (July 2016-2019) Difference – NB and Existing % growth
Blackburn with Darwen 17.77% 11.38% 6.38%
Oldham 14.88% 9.62% 5.26%
Barrow-in-Furness 11.25% 6.02% 5.23%
Redbridge 8.77% 3.74% 5.03%
Merthyr Tydfil 9.61% 4.83% 4.78%
West Dunbartonshire 10.91% 6.23% 4.69%
Na h-Eileanan Siar 13.81% 9.28% 4.53%
Burnley 14.32% 9.90% 4.41%
Worcestershire 15.29% 10.89% 4.39%
Barnsley 13.87% 9.69% 4.18%
UNITED KINGDOM 9.91% 5.95% 3.96%
WALES 14.27% 9.21% 5.06%
SCOTLAND 9.58% 4.73% 4.85%
ENGLAND 9.59% 5.76% 3.83%
NORTHERN IRELAND 6.94% 9.45% -2.51%
NORTH WEST 12.71% 7.59% 5.12%
YORKSHIRE AND THE HUMBER 10.94% 6.04% 4.89%
EAST MIDLANDS 15.90% 11.07% 4.83%
SOUTH WEST 12.13% 7.47% 4.65%
WEST MIDLANDS 15.41% 10.84% 4.57%
EAST OF ENGLAND 10.72% 6.62% 4.11%
SOUTH EAST 6.84% 3.37% 3.47%
NORTH EAST 3.64% -1.24% 2.39%
LONDON 1.59% -2.06% 3.65%

 

Did you like this? Share it: