The latest research by property developer, StripeHomes, has looked at where offers the best buy when it comes to the new-build market, based on affordability, house price growth and the time taken to recoup a new-build price premium.
New-build price premiums
The research shows that currently, the average new-build in the UK costs £302,749, 33% more than the existing UK house price.
Regionally, this new-build price premium is highest in the North East (60%), the North West (45%) and the East of England (34%), while London is home to the smallest gap at 10%.
However, on a local level it’s Harlow in Essex that takes the top spot for largest new-build price premium. Buying new in Harlow will currently cost you £548,535, 104% more than the average price for an existing property in the area.
Blaenau Gwent (94%), Gravesham (91%), Preston (99%) and Torfaen (86%) are also home to some of the highest new-build price premiums in the UK.
So why buy a new-build?
Other than the obvious advantages of new-build quality, there are as many as 40 areas of the UK where the average new-build is currently cheaper than buying an existing home. Surrey Heath is home to the biggest discount, with the average new-build costing £281,973; -27% cheaper.
In terms of straight up affordability, Hyndburn is home to the lowest average new-build cost (£97,939), along with North Ayrshire (£115,305) and Burnley (£122,193).
Higher house price growth
However, perhaps the biggest advantage of buying new is the appreciation in property values. In the last year, the average UK new-build has increased by 7.3% compared to just 1.5% for existing homes.
New-build house price growth has increased by between six and eight percent across every region of the UK in the last year, while the existing market has seen growth hitting just three percent in the best performing regions.
The strongest new-build growth compared to the existing market is in London, where new-builds are up 7.6% to 1.2% for existing homes.
The South East, East of England, South West and North East have also seen some of the strongest new-build house price growth when compared to that seen in the existing market.
At this rate of growth, it would take just 3.4 years for a new-build homebuyer recoup the additional cost of buying new through the appreciation of their property’s value.
In London, it would take the average new-build buyer just 1.2 years to see their property appreciate to the point they would recoup the new-build price premium paid. Even in the North East where new-builds carry the largest price premium, the current annual rate of growth means it would take just five years for a new-build to increase in value by the £73,000 premium initially paid.
Managing director of StripeHomes, James Forrester, commented:
“Opting to purchase anything brand new is going to cost you more but when it comes to new-build homes, the premium is often justified and well worth the additional cost.
Buying a new-build comes with a whole host of benefits, not just an easier, chain-free sales process with the ability to move straight in. There are a host of incentives available such as paid for stamp duty and help for first time buyers, as well as the fact that new-build homes are often better quality, more energy efficient and require little to no maintenance for a good number of years.
However, the real benefit of a new-build is the appreciation of its value. Despite the tough market conditions seen pretty much since the Brexit vote itself, new-build values have continued to go from strength to strength, far outperforming growth seen in the existing sector.
So not only will you purchase a far superior property, but even in areas with the highest new-build premium, it will only take a matter of years before you’re likely to recoup the additional price paid in house price growth.”
All data on new-build and existing house prices sourced from the ONS.