Property News

New-Build Price Growth Outperforms Existing Homes by 20%

The latest research by Unlatch, new homes progression and aftercare platform for developers and housebuilders, reveals that the annual price growth of British new-build homes has outperformed existing homes by almost 20% in the past year.

Homebuyers and professional property investors alike are keen to buy homes that can promise good investment returns.

So what is their best, most reliable option? Should they be buying new-build homes or investing instead in existing properties?

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%.

New-builds in Britain have, therefore, outperformed existing homes by 19% when it comes to house price performance.

But where in Britain do new-builds offer the very best returns when compared to the performance of existing homes?

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.

Lee Martin, Head of UK for Unlatch says:

“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.”

Bellway Reports Record Revenue As House Prices Rise

The company reported a 13% increase in revenues to a record £3.5bn and 10.5% growth in completions to a record 11,198 in the financial year to the end of July

Bellway has reported a record year of sales as rising house prices offset increasing energy and building costs, and the housebuilder predicted a bumper 2023 despite higher interest rates and the cost of living crisis.

The company reported a 13% increase in revenues to a record £3.5bn and 10.5% growth in completions to a record 11,198 in the financial year to the end of July.

Bellway said it benefited from a higher than expected rise in the average selling price, which rose 2.6% to £314,000.

Bellway has delivered another strong performance, with volume output and housing revenue reaching record levels against the backdrop of a challenging operating environment and macroeconomic uncertainty, the chief executive, Jason Honeyman, said.

Despite the growing economic pressures as the Bank of England raised interest rates despite predicting an imminent recession, Bellway forecast another record year. The number of home completions is expected to reach 12,200 – about 12% more than in pre-Covid 2019. The company’s forward orders book stands at 7,223 homes with the value rising 4.5% to £2.1bn – another record – and it said it has already sold nearly 50% of private completions.

During the year the pace of business increased as buyer demand remained strong with the reservation rate increasing by 6.9% to 218 a week, while the cancellation rate remained at a low 13%.

Confidence among customers is strong, the company said. Although interest rates and fuel costs have contributed to the rise in the cost of living, Bellway’s range of modern, well-designed new homes continues to provide an attractive and affordable proposition for our customers.

The company expects the average selling price to drop slightly to just over £300,000 in the year to the end of July 2023 owing to previously announced changes in its geographical and product mix.

Own New will make 95 per cent mortgages available to new homes buyers

A scheme which will make competitive 95 per cent mortgages available to more people buying new homes has been unveiled.

With more than 30 members already, from national PLCs to smaller regional builders, more housebuilders are being invited to join Own New, which will increase availability to high-LTV mortgages for new homes across the UK.

Own New has a range of ways to reduce a lender’s risk, making it easier for lenders to offer mortgages for new homes with low deposits.

There are no regional price caps and it is free to join. The housebuilder pays a small fee after completion to support the scheme.

Own New was created by Market Mortgage, a company founded by Eliot Darcy with the intention of enabling mortgages for people who want to buy a new home but can’t stretch their deposit any further. Market Mortgage has the backing of Capita as a major shareholder.

Own New works with developers, mortgage lenders and investment banks to reduce risk for the lender. This creates better mortgages for new builds which are available to a broader range of people.

Customers buying from participating housebuilders can simply apply for a normal 95 per cent mortgage through the broker and lender as usual. There is no cost to the homebuyer for using Own New.

Barratt Developments was one of the first companies to join the Own New scheme.

Eliot founded Market Mortgage with the intention of tackling inequality in the housing market. His aim was to make home ownership attainable to people who don’t have a ‘bank of mum and dad’ to help fund their purchase.

Housebuilders can sign up to Own New by completing a services agreement. Training can be arranged for sales teams and marketing collateral is provided to help housebuilders explain the scheme to customers.

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