The price gap between new builds and existing properties in the UK has reached £64,624 according to data from the ONS: HPI, December 2020 [1]
Andy Sommerville, Director at Search Acumen, says: “This latest data illustrates the level of the price premium consumers often have to swallow when purchasing a new build.
“The wide gap between new build and existing property prices can be partly attributed to the high concentration of new build properties in London and the South East. Property prices are typically higher in these areas relative to the rest of the UK, meaning the average price for new builds is not weighed down by sales completing in parts of the country where prices are relatively lower.
“The relatively high proportion of new builds in the capital highlights the urgent need to distribute and increase the supply of new housing stock more evenly across the UK. Doing this will both provide better access to homes outside of London and potentially make homeownership more affordable.
“High new build prices also point to the scale of the challenge facing first time buyers – this group often rely on these properties for their first home.
“First time buyers have been more prone to income shocks during the pandemic, meaning they may have used some of their savings which were originally intended to be used as a housing deposit to cover living costs. Disruption to this group’s income is also being compounded by a scarcity of high loan to value mortgages and tighter lending criteria. These tough conditions for first time buyers are likely to result in reduced demand for new builds in the future.
“Greater investment in digital and AI tools could help achieve a more equitable distribution of housing stock. Improving builders’ access to property information and encouraging greater data consumption will help them identify the risks up front to enable to them make more informed property development decisions.”