Homebuyers are paying premiums of up to £300,000 for new build homes in London, according to the latest research from LonRes, property data analysts.
The most expensive new homes, compared to similar second-hand properties, are in King’s Cross. The average price of a new build here is £868,657 compared with £584,919 for a property that has already been lived in. This is a difference of almost £300,000.
Fulham Riverside’s average apartment price is £1,063023, compared to £727,364 for a second-hand home, a difference of £335,659.
Homebuyers Pay Up to £300,000 More for a New Build in London
The study compared the price of new and used flats sold in ten key London redevelopment areas in the past year and discovered significant premiums in all spots. The smallest premiums, at 27%, were found in Earls Court and Woolwich.
Head of Research and Data Analysis at LonRes, Marcus Dixon, reports that in the last five years, the price of new flats has soared, surpassing the values of older properties.
He says: “The average value achieved for new flats sold across Greater London has increased by 70% in the past five years, compared with 31% for second-hand flats.
“Much of this increase in achieved prices has been the result of more luxurious developments in higher-value areas of London, with a handful of new developments in prime central London achieving more than double the amount per square foot than neighbouring properties on the second-hand market.
“Five years ago the average price of a new build flat sold across Greater London was 5% lower than the average value of second-hand flats, by this year the premium for new flats had risen to 24%.”1
Jo Eccles, Managing Director of buying agent Sourcing Property, notes that new build homes are often larger and better laid out than period conversions.
She explains: “One-bed flats in new build schemes tend to start at around 530 square foot, whereas one-bed flats in period conversions start from around 450 square foot.
“These types of properties are very popular with downsizers; we work with quite a lot of older clients who are selling their family houses and buying in new schemes in order to minimise stairs and benefit from a lift and porter, plus they often don’t want the additional work of maintaining a garden.
“We also see parents investing their money in new build flats while their children are very young so that they can let it out hassle-free and almost forget about it until their children grow older, then sell the property and help them get on the ladder.”1
Founder and Managing Director of Johns and Co – specialists in selling new build properties – John Morley, points out that new homes are generally more energy efficient and therefore cheaper to run than older homes. He also mentions that as the market is growing, a new build property can be worth more than it cost by the time the sale is completed.
Regarding investments, Merton Croisdale-Appleby, a director of Maskells estate agents, says the best buys are in developments where supply of new homes is limited: “In areas where large numbers of new builds are under construction, with continued new stock on the horizon, it can lead to better value opportunities for those buying second-hand.”1