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New-Build Investment Properties Hit Decade-High Premium Price

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    New-Builds See Rise in Price Premium Across Britain

    New-build properties are often seen as a wise buy-to-let investment as investors get a property that needs little to no restorative work. The property will usually have a good EPC rating and modern amenities. They are also usually found in strategic locations with good capital growth potential. In addition, new builds may also command higher rents due to their superior features and new fixtures and fittings.

    Now, a new piece of industry research shows that new-build prices are reflecting the benefits of such properties.

    Let’s look at the information in more detail.

    Discover More: Interested in new-builds in Liverpool? Check out our guide! Alternatively, you can read our article on Manchester property investments for more insights into North West investment.

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      New-Build Price Growth Is Overwhelmingly Positive

      The most recent industry data comes from the property development software APRAO. The research looks at house price data for new-builds and existing homes over the last ten years, considering new-build price premium fluctuations.

      According to the study, the average UK new-build property enjoyed a premium of 29.9% in 2023, the highest premium in ten years and 6.9% stronger than the average premium recorded for 2013. This highlights the popularity of these properties in the eyes of buyers and tenants.

      Apart from 2023, new-build property premiums peaked in 2018, hitting an average of 28.5% across the UK. Since then, premiums fell steadily before reaching the decade-low figure of 20.5% in 2022.

      Regionally speaking, the data from APRAO reveals that new-build price premiums reached a decade-high in every region except London, the only property market segment to go against the grain.

      The new-build house price premium in London sits at 0.2% for 2023. This is indicative of the overwhelmingly large property prices in the capital in general, which have prompted landlords to look for buy-to-let property investments in more affordable regions like the North West. Still, the marginal increase represents a reversal of the recent trend that saw price premiums fall to -0.7% and -4.3% in 2021 and 2022, respectively.

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      How Did the Experts React to the New-Build Price Growth Data?

      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:

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      Dale Barham

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      Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.