New build property values rising much faster than existing properties

New build property values are rising at a much greater rate than existing property values according to a study by Edinburgh-based property management firm DJ Alexander.

One of the UK’s largest family run property management companies, the firm has found that the over the last year the average value of new build properties in the UK has increased by 8.5 per cent at a time when existing property values only rose by 2.9 per cent.

Wales experienced the greatest average value increase for new builds over the last year rising by 10.2 per cent with Northern Ireland the lowest at 4.8 per cent. The greatest increase in average value for existing properties occurred in Scotland where prices rose by 4.4 per cent with England the lowest at 2.8 per cent.

Across the English regions the highest newbuild value increase occurred in the East Midlands at 9.6 per cent with the lowest in London at 3.1 per cent. For existing properties, the highest increase was 4.7 per cent jointly in East and West Midlands with London the lowest at 0.009 per cent.

The analysis found that this a long-term trend with average new build values increasing by 41.8 per cent over the last five years compared to an existing property value increase of 31.9 per cent which is nearly 10 per cent greater price rise over the period.

David Alexander, managing director of DJ Alexander Ltd, said: “These figures highlight the tremendous growth in value of newbuild properties over the short and medium term. What is interesting is that over both one and five years there is not a part of the UK where newbuild price growth has not outperformed existing properties and often by a considerable amount. Ten per cent additional value over five years is substantial and indicates the vibrancy of the new build sector.”

“The reasons for this may be to do with where these properties are being built. They are more likely to be in areas of growing appeal whereas the existing housing stock may be in parts of cities and towns which were once thriving but may now be in need of some upgrading.”

David continued: “For individuals and for investors this highlights the value of buying new build over traditional. You get exactly what you want, it is generally designed to the standard that you want and is in a location of potentially like-minded people i.e. estates of young families, communities of professionals, areas predominated by the elderly. All of these factors are potentially very attractive to buyers and to investors who will be buying something they can understand and, as these numbers show, will not just hold their value but will outperform the traditional market over the short to medium term.

“The one part of the UK which has seen the lowest new build price growth over the last year is in London and the recent report stating the number of new homes being built in the capital has fallen to its lowest level in six years reflects the wider slowing in the housing market.”

David concluded: “These figures provide further evidence, if it were even needed, to encourage local and national government of the importance of encouraging new builds across the country. Demand is clearly high which is why prices are outstripping those of traditional homes. This is a clear indicator that we need to free up land to build where people want to live, in properties that are attractive, and in areas that require homes for the future.”