Should property investors looking for a better return on their investment be purchasing new-build homes or existing properties?
New research has revealed that if investors wanted to make more of a profit on their property purchase in the past year (March 2021-March 2022), they should have invested in a new-build property.
The new study prepared using average price data from the UK House Price Index found that the annual price growth of British new-build properties outperformed existing properties by 19 per cent year-on-year. Here are the figures:
- The average price of an existing home in Britain in March 2022 was £272,851; this was up 8 per cent on the same period in 2021
- At the same time, the average price of a new-build property rose from £330,662 to £422,414, marking an annual growth of 28 per cent, meaning that new-builds in Britain outperformed existing homes by 19 per cent
The researchers next looked at where in Britain new-builds offer the best returns when compared to existing properties. Their research revealed that:
On a regional level:
- New-builds performed most strongly against existing properties in Wales. The average new-build in Wales saw its value increase by 34 per cent from March 2021-22, rising from £246,740 to £331,159. This growth was 23 per cent higher than that of existing properties in the region which, in the same period, saw their value increase from £181,199 to £201,633, marking growth of 100 per cent
- Scotland’s new-build properties enjoyed growth of 29 per cent compared to existing properties (+7%) – a difference of 22 per cent – while in the East Midlands, South West, and North East, new-build growth outperformed existing homes by 21 per cent
- In the East of England, South East, Yorkshire & Humber, and West Midlands, new-build price-performance was 20 per cent better than existing properties; in the North West the price growth gap was 19 per cent while in London, new-builds saw 15 per cent higher growth than existing stock
On a local authority level:
- New build properties in Merthyr Tydfil, Wales outperformed older properties by 18 per cent
- Scotland’s Western Isles also saw a property price growth margin of 18 per cent
- In East Ayrshire, East Lothian and Glasgow new-build performance was 17 per cent higher than existing properties
- Richmond ranked top in London, where new-build property prices outperformed existing by 14 per cent, while in Bexley the difference was 12 per cent, Camden (12%), Hackney (12%) and Tower Hamlets (12%) also ranked amongst the highest in the Capital.
Lee Martin, Head of UK for Unlatch, the new homes progression and aftercare platform for developers and housebuilders that conducted the research, commented: “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.”
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