New build property is defined as property that has been built, converted, or refurbished in the last two years- and a recent study has showcased why now may be the best time to invest in new build, rather than in existing property.
New build property, whether built, converted, or refurbished, can be off-plan developments, occupied or rented accommodation- but it must be in the ownership of the builder or developer, and have been constructed in the last two years.
A recent report by Alliance Fund showcases a study taking place over the last year and reveals that new build property has increased by 23%, which has outperformed existing property by 17%.
Secondly, data by the Land Registry has illustrated the average new build price in the UK sits around £412,051 compared to average existing builds, which are currently on sale at an estimated £282,037.
Ian Crawford, CEO of Alliance Fund stated “…when dissecting the market by sector, it’s clear that it’s the health of the regular market that’s deteriorating and the contrast between the new build and existing property market is quite stark, to say the least,”
Whilst the price of property dramatically increased during the pandemic, many developers can now see these prices slightly declining, levelling out to a more reasonable price baseline. However, whilst this may be the case for existing builds, new build property is still seeing prices soar.
“New build values have continued to soar, attracting strong premiums across the board, even in a largely lukewarm London market… This is undoubtedly due to a realisation by homebuyers that they offer a far superior investment and one that is going to hold its value to a far greater extent, even in the event that the property market takes a dip.”
Many are realising the importance of safe investing. One of the ways to invest safely is to purchase an asset that will keep its value longer, and this can be found in new build property. Investors purchasing new builds may have the option of buying off-plan, which already comes out cheaper than existing builds depending on location and the development. Purchasing off-plan also comes with high yields, which may increase as development continues and the area benefits from construction.
“At the same time, many new builds also offer a cost saving, whether that be initially in the form of subsidised stamp duty, or in the longer term as a result of superior build quality and energy efficiency – something that has come to the forefront of the purchasing thought process for many buyers as a result of the cost-of-living crisis,”
Purchasing off-plan benefits the developer and investor equally. Purchasing an asset with a longer shelf life, at a lower price, all whilst gaining a high yielding investment is a fantastic way to diversify a portfolio and move with the current market.