The latest industry research by property development appraisal software, APRAO, has found that new-build house price premiums climbed to their highest in a decade last year, following four consecutive years of decline.
APRAO analysed Gov house price data on both existing and new-build properties over the last decade, looking at the house price premium commanded by new homes and how this premium has changed.
The research shows that across Britain, the average new-build commanded a premium of 29.9% in 2023, the strongest new-build house price premium seen over the last decade and 6.9% higher than the average premium of 23% in 2013.
New-build house price premiums had previously peaked in 2018, when they averaged 28.5% across Britain. However, new home premiums had been in steady decline since, falling each year to a decade low of 20.5% in 2022.
In fact, a regional analysis by APRAO shows that new-build premiums have hit a decade high in all but one region, with London the only pocket of the property market to buck the trend.
At 0.2%, the capital is also home to the weakest new-build house price premium. However, the marginal premium commanded by new homes in the capital in 2023 does reverse the previous trend whereby existing homes were commanding more money, with new-build premiums previously sitting at -0.7% in 2021 and -4.3% in 2022.
The North East tops the table with the strongest new-build premium, averaging 56% in 2023, whilst Scotland (45.2%) and the East Midlands (40.3%) also boasted premiums of more than 40%.
CEO of APRAO, Daniel Norman, commented:
“While new homes have always commanded a higher price compared to existing stock, this premium has been reducing in recent years, with the impact of the pandemic and, more recently, higher mortgage rates restricting market activity and buyer purchasing power.
However, we’ve seen new-build house prices increase at an incredible rate over the last year, not only driving the returning health of the wider market, but also pushing new home premiums to their highest in the last 10 years.
London is the only exception in this respect, but that said, the marginal premium commanded over the last year for a London new-build does reverse the previous trend whereby existing homes outperformed new-build house prices over the last two years.”
