New build premiums continue to rise
Since 2010, the differential in price for newly built homes compared to second-hand properties has steadily widened. In 2018 new properties sold, on average, for 26% more than second-hand properties – compared to a differential of just 17% in 2010. The average price of a new build property sold across England and Wales in 2018 was just below £300,000 – £60,500 more than the average price of a second-hand property.
Historically, the premium paid for new build properties has increased in a strong market, but narrowed in a slower market, as developers reduce prices in order to achieve sales. However, this is not the case in current market conditions. The rising quality of new schemes, the current lack of supply of available properties, developer incentives and Government support for the new build sector through Help to Buy, are all factors which have undoubtedly helped keep new build premiums solid over recent years.
Walter Mythen, our New Homes Director, explained that there are several reasons why these premiums are still increasing. Firstly, investors are opting for new builds as the upkeep is typically less than a second-hand property. Secondly, there are often huge infrastructure projects taking place around these new build developments. For example, the extension of the Northern Line into Nine Elms has created huge opportunities for developers as the area is opened up to more people as it undergoes regeneration. Other notable projects with new builds around them are shopping centres such as Westfield Stratford and White City, and then there are additional new transport links that have an impact, like the DLR, Crossrail and even new Thames Clipper stops. Finally, new build property often have facilities of a very high standard, for example, 24hr concierge, fitness suites, outdoor pools and sauna and steam rooms – hence the premium.
Take a look at our new build properties for sale here.