Price rises of new build houses go way ahead
Prices of new houses have soared way ahead of both secondhand houses and also new-build flats.
Analysis from property data firm Hometrack shows that over the last three years, prices for new houses out-performed prices of secondhand houses in all regions of England.
In London, new-build house prices rose by 47% compared with a rise of 25% for resale houses. In contrast, prices for new-build flats in London rose 11%, while resale flats rose 19% over the same three-year period. Only in southern England did the price of new flats outperform those of resale apartments.
Richard Donnell, Hometrack’s director of research, said: “The analysis highlights how the market has supported the strategy of developers who have adapted their product mix to meet demand.
'By moving away from first-time buyer / investor flats to family houses, developers have targeted those looking to buy homes with embedded equity, primarily in the south of England. Together with land write-downs and the purchase of discounted land in the early part of the downturn, higher prices have supported the growth in the profitability of housing schemes.'
However, Hometrack says that affordability issues will put a cap on further price rises of new houses. It says that even in the relatively affluent south of the country, two- and three-bedroom new homes can only be afforded by the top 30% earners.
Donnell said: 'If developers are to continue to react to market forces, they need to look to new areas for growth in terms of location and target markets. Broadening the product mix is a key to supporting sales rates. However, market rent and affordable housing tenures deliver lower capital values than housing for sale. The key to success is swapping tenures as part of the renegotiation of planning permission for schemes with marginal viability. There is plenty of demand for new housing in the UK: the question is what product and at what price.'
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