New builds are gaining value faster than older stock, as they apparently outperformed existing homes on price growth by almost 20% last year.
The property type is traditionally seen as a bad investment because they lose their value quickly, but more investors are seeing advantages, which is seemingly keeping prices high.
New builds tend to have a better EPC rating than existing properties, meaning energy bills are lower. Landlords also won’t have to alter their property when the minimum rating of C for new tenancies kicks in from the end of 2025.
The current average price of an existing home in Britain is £272,851 having increased by 8% in the last year.
At the same time, the average price of a new-build has risen from £330,662 to £422,414, marking annual growth of 28%.
The research comes from Unlatch, new homes progression and aftercare platform for developers and housebuilders.
Lee Martin, head of UK for Unlatch, said: “New-build homes are increasingly desirable. Their overall finish and quality has improved dramatically over the past decade and they are vastly better than older properties when it comes to energy efficiency and fuel consumption. In today’s world, this looms large in homebuyers’ minds, even more so since the cost of living crisis kicked in.
“This is not only true for end users, but also for investors alike. Investors on the whole do prefer to go for a new build property for many reasons, one more being that by the time said investor completes on their purchase, the agent usually already has a tenant lined up to move in; meaning no void periods.
“In a fast, frantic, and highly competitive housing market, new-builds also offer more reliability in terms of the actual purchase itself. Fewer sales are subject to falling through as a result of unwanted discoveries during the surveying process, as well as the fact there is no dreaded chain to contend with.
“Of course, this heightened attraction does mean that new-builds have seen a far greater level of house price growth when compared to the existing market, but the flip side to this is the fact they also make a far sounder investment.”
On a regional level, new-builds have performed most strongly against existing homes in Wales. The average new-build home in Wales has seen its value increase by 34% in the past year, rising from £246,740 to £331,159. This growth is 23% higher than that of existing homes which, in the same time period, saw their value increase by 11% from £181,199 to £201,633.
In Scotland, new-build growth of 29% compared to existing property growth of 7% - a difference of 22% - while in the East Midlands, South West, and North East respectively, new-build growth outperformed existing homes by 21%.
In the East of England, South East, Yorkshire & Humber, and West Midlands, new-build price performance is 20% better than existing homes, in the North West the difference is 19%, and in London, it’s 15%.
On a local authority level, new-builds are outperforming older properties by the largest margin in Merthyr Tydfil, Wales, up by 38% in the past year, 18% higher than existing homes which have seen their value increase by 20%.
This is followed by Scotland’s Western Isles where new-build growth of 35% matches against 17% growth for older homes - a difference of 18%.
In East Ayrshire, East Lothian, and Glasgow new-build performance is 17% higher than existing properties.
Richmond ranks top in London, where new-build house prices have outperformed existing by 14%, while Bexley (12%), Camden (12%), Hackney (12%) and Tower Hamlets (12%) also rank amongst the highest in the capital.
Lots of housing stock in the UK was built after the first world war and a lot of it is still around after more than a hundred years..
I wonder how many ticky-tacky new builds will still be standing in 100 years time?