According to research by Alliance Fund, the value of new build properties increased by 23% last year, outperforming the existing market by 17%.
Based on data released by the Land Registry, the study estimated that the average British newly constructed home now commands £412,051. Comparatively, existing resales are currently achieving £282,037, an increase of 6% on an annual basis.
In addition to outperforming the existing sector by 17% on the annual rate of house price growth, the average new build commands a 46% premium over the wider market.
“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.
According to Alliance Fund’s research, Scotland has the highest rate of house price growth in Britain, with new homes climbing 29% in value, almost 20% more than the 10% increase across the regular market.
There has been an 18% increase in house prices in the new build sectors in the East of England, Wales and the South West compared to the existing market. The North East, however, is where new houses command the biggest premiums, with the average new house costing £257,371, 74% more than an existing house costing £148,327.
According to Alliance Fund’s study, new build house prices have climbed by 17% in the last year, 12% higher than the 5% growth experienced across the regular market, with the average London new build commanding an 11% premium.
Compared to the rest of the British new build market, London remains the most expensive place to buy a new home at £593,168.
“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.