Where are the most profitable new-build markets? New research has revealed the hotspots around the UK where developers are achieving the highest returns.
The research looked at the average cost of constructing a new-build home per square foot across seven major British cities, including the cost of materials, labour, first and second fix costs, a contractor’s margin of 2.5 per cent and preliminary costs of 15 per cent.
It then looked at the total cost of constructing a new home based on the average size in each city comparing it to the market value of a new-build in the current market.
The research from property management firm Warwick Estates shows that on average across these major cities, it costs £139,238 to build a new home, while the average market value is currently £320,515. This is a positive difference of 130 per cent, for developers.
According to the research, the most profitable market for new-build homes is Edinburgh where it costs an estimated £126,400 to construct a new-build home in the Scottish capital while the average sale price is £375,870 – a 197 per cent profit margin for developers.
London ranks second, with an estimated construction cost of £181,700, while the average new-build home sells for £533,642. A 194 per cent profit margin for developers.
The third most profitable new-build market was Bristol (137%), followed by Leeds (133%), Birmingham (107%), Newcastle (101%) and Manchester (85%).
Glasgow ranked bottom of the table, although, with an average construction cost of £139,238 and an average new-build value of £320,525, the city is still home to a 68 per cent profit margin.
Another recent study based on Google search data also found that the new build market in the North is booming in terms of homebuyer demand, with nine out of the top 10 most sought-after new-build locations being north of Birmingham.
The research from food waste disposal manufacturer Insinkerator also revealed
- Demand for new build houses in Northampton is 25x higher than in London, relative to population size.
- The Scottish cities of Edinburgh and Aberdeen both feature in the top 5 for consumer demand
- Three Scottish cities make the top 10 for ‘new build home’ consumer demand – Glasgow ranks 7th in the UK
- The East Midlands features twice in the UK’s top 5 with Northampton 1st and Leicester 5th
