Daniel Norman, CEO of APRAO, 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 ten 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.”
While these new-build premiums may mean new-build property prices are increasing, investors may want to consider off-plan property investment to purchase new-build accommodation for a more affordable price. By buying the property straight from the developer – typically through a property investment company – buy-to-let investors can acquire the property for a discounted price. That price then appreciates during the development phase until the property is ready, allowing for instant capital growth.
For more insights into the UK housing market, check out some of our buy-to-let area guides, including:
