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New Build V Second Hand Price

By lucmin on 14th June 2017

We looked at the difference in prices between new build and second hand homes sold since the start of 2017 across England and Wales. Overall, sales of new build commanded a 29% premium over second hand. We drilled deeper into the data and found that the difference is almost entirely driven by new build flats. The premium for other types of new build home is minimal or negative, while the premium for new build flats over their second-hand equivalent so far this year, has been over 60%.

For detached houses, new build stock is much less likely to be offering something superior to the existing stock in established housing areas. In fact, period homes are likely to attract a premium. New build detached homes do not raise the bar on quality in the same way as new build flats.

However, this is not comparing like with like – the data is not telling us that a new flat would achieve 63% more than a second hand flat of the same quality in the same location. But it does highlight an interesting trend. This substantial premium reflects the change in style and specification of new flats compared to the existing stock – a steep rise in quality and a parallel shift in buyer preferences.

There is another element to a new build premium that may not be evident in current market conditions. In previous research, we have found that the new build premium increases in a strong market and narrows in a weak market, as developers are generally more willing to reduce prices in order to achieve sales. This 2017 data indicates that the new build premium may be beginning to rise. It is something we will return to in up-coming graphics and blogs.

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