New home premiums continuing to rise

The new-build market is continuing to outperform the wider market, with average prices for new homes not only climbing at a higher rate compared to the existing market but also commanding a stronger premium than it did the previous year.

Related topics:  Property,  House Prices,  New Build
Property | Reporter
24th February 2023
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Research by Alliance Fund analysed the split between the new-build and existing markets based on sold price data from the Land Registry for residential property sales to have completed over the last year (2022), as well as how this performance compares to the previous year.

The figures show that across England, the average new-build home sold for £339,995, a 19.3% premium versus the average of £285,000 seen across the wider market. This premium is 1.1% higher than it was in 2021 when new homes sold for 18.2% more

However, when breaking the data down by property type, it’s clear that new-build flats continue to drive the new home market. In 2022, the average new-build flat commanded a 56.9% property price premium versus the wider market, up by 4.5% on an annual basis.

New-build terraced homes commanded the next highest premium at 14.9%, although this premium has reduced by -0.7%.

It’s a similar story for semi-detached new homes, commanding a premium of just 1.8%, also down by -0.6% annually.

What’s more, the average price of a detached new-build home actually sat -11.4% lower than the wider market in 2022, down by -3.45 on the previous year.

Regionally, it’s the North East that is home to the best-performing new-build market where property values are concerned. In 2022, the average sold price for a new home commanded an 85.7% premium versus the wider market. This premium has also increased at the largest rate of all regions, up 20.1% from the previous year.

The North West is also home to one of the highest new-build price premiums at 44.7% and, like the North East, the region has also seen the second-largest annual increase in this premium at 9.2%.

The South East is currently home to the smallest new-build house price premium at 12.7%, followed by London (13.2%) and the South West (14%).

However, all regions of England have seen the premium commanded for a new home increase on an annual basis, bar one.

While new homes in the West Midlands commanded a respectable premium of 28.3% in 2022, this has reduced by -4.9% when compared to the previous year.

Iain Crawford, CEO of Alliance Fund, commented: “Despite the increasingly turbulent economic picture of late, the new-build sector has continued to perform resiliently. This is evident when it comes to the property price premiums that new homes are commanding over the regular market, even during a stint of record house price growth.

"While new homes are commanding a healthy premium across all regions of the UK, it’s the North East and North West that have been the frontrunners over the last year, both where new-build premiums and the growth of this premium are concerned.

"Proof indeed, that the sector is firing on all cylinders and it’s not just London where developers are focussing their attention.”

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