Although it’s no big secret that new builds command a higher price than their existing property counterparts, the price gap between existing homes and the premium paid on new builds has grown by £40,000 in the last decade.
According to the latest research from new-build snagging company, HouseScan, 10 years ago, the average new build in Britain went for £204,319, 19% more than the average existing property (£171,781). However, fast forward to today, and the average new build is currently valued at £314,242, 30% more than the average existing property (£242,018).
This means the new build price gap has widened by 11% in the last 10 years, meaning new build homebuyers are currently paying a £39,685 premium which is £7,147 more than they were a decade ago.
In London, new build properties currently sell for 2.3% on average. While this isn’t a huge premium, a decade ago, new build homes actually sold for -3.2% less than existing homes.
This 5.5% increase isn’t the biggest on a regional basis, but it does mean that 10 years ago London new builds were nearly £10,000 more affordable than existing homes, while today they are almost £21,000 more expensive, with the price premium gap widening by over £30,000.
In the South East, the average new build home would set you back £20,840 more than an existing home in 2010. Today, this gap has widened to £41,935, meaning new build homebuyers are paying double the premium they were a decade ago.
The East of England (£15,245), South West (£7,162) and East Midlands (£6,132) have also seen thousands of pounds added to the new build price premium paid by homebuyers since 2010.
With an increase of £545, new build price premiums have largely remained the same across Yorkshire and the Humber.
Interestingly, not all new-build homebuyers are paying a higher premium compared to a year ago. In the North East, the average new build sold for 37.3% more in 2020; a premium of £44,444. Today, this premium has increased to 52.9%, the largest increase of all UK regions at 15.6%.
However, the gap between new build and existing house prices has actually closed, meaning this 52.9% premium equates to just £24,906 more paid for a new build property. As a result, the premium paid by new-build home buyers has actually reduced by just short of £20,000.
This is also the case in the West Midlands (-£9,859), Scotland (-£7,596), the North West (-£5,079) and Wales (-£4,252).
Harry Yates, Founder and Managing Director of HouseScan, comments: “I think many homebuyers will appreciate that a brand new home will carry a price premium, in the same way a brand new car will set you back more than a second hand one. However, some might argue that to see this margin increase quite considerably in the last ten years is a bit of a low blow. Especially when you consider the various issues that have plagued housebuilder reputations, from the leasehold scandal to the recurring issues surrounding substantial snagging lists amongst others.
“However, it’s also reassuring to see that despite an increase, the closing gap between property values in some regions means homebuyers are actually paying a smaller premium now compared to a decade ago, despite consistent upward house price growth.
“Essentially, the best value new build purchase is in the North East as the monetary gap between existing and new build homes is not only one of the smallest, but it’s reduced by the largest margin since 2010.”