Existing homes are still struggling against the current market headwinds, according to new research.
The latest industry research by property development appraisal software, APRAO, looked at the latest Gov data for both new-build and existing house prices going back over the last decade to see how both areas of the market have performed historically and which is driving the current return to form being seen across the property market.
The research shows that, historically, both new-build and existing homes have helped drive market performance to a similar degree.
Over the last 10 years, new-build house prices have increased by 73%, with existing homes not far behind with a 63.7% jump. Even over the last five years, a 24.1% increase in the average price of an existing home has almost matched the 25.5% increase seen for a new-build property.
However, over the last year, it’s clear that new-build homes have been the driving force behind the improving health of the housing market. The average price of an existing property has increased by just 0.2% year on year, while the average new-build home has increased by 8.1%.
In fact, new-build values have outperformed the existing market across every region of Britain. The West Midlands (+1.2%), East Midlands (+1.1%) and North East (+1%) have posted the strongest performances with respect to existing house price growth, but in contrast, new-build values have increased by 9.2%, 8.9% and 10.3% respectively.
In some regions, strong new-build sector growth has even helped to negate an otherwise declining housing market. Existing market values have actually fallen year on year across the South East (-0.2%), East of England (-0.5%) and Scotland (-0.6%), however, all three regions have seen new-build prices climb by between 7.1% and 8.2%.
And in London? The capital has struggled the most of all regions due to a combination of higher borrowing costs and high house prices. As a result, existing property values are down -1.3% year on year, however, new-build values have crept up by as much as 3.3%.
CEO of APRAO, Daniel Norman, commented: “We’re now starting to see the market return to health following a period of inactivity caused by restricted buyer affordability as a result of higher mortgage rates.
"So it may seem strange that it’s the new-build sector driving this return to form given the fact that new homes generally command a premium versus existing housing stock.
"However, this isn’t unusual and while buyers may be paying more initially, they understand that over the long term, investing in a new home is more cost-effective. This is down to a number of factors such as reduced outgoings due to higher energy efficiency, lower maintenance costs and a stronger resale price.
"This highlights the importance of new homes delivery when it comes to stimulating the housing market, particularly when the existing sector is largely underperforming.”
