Home » News » Housing Market » Average house value would be just £164,000 without ‘location, location, location’
The Negotiator Conference & Expo18 Book Tickets 2018 image
Housing Market

Average house value would be just £164,000 without ‘location, location, location’

Insurer Direct Line says 'location premium' on top of rebuild cost is more than 60% in many cities.

Nigel Lewis

house value

The average price of a three-bedroom home in the UK would be just £164,000 rather than the current £277,600 if properties were bought and sold based purely on their rebuild value, research has revealed.

Direct Line Select Premier Insurance says that factors such as location, the quality of local amenities, transport links and schools drive up the average price of a house in the UK by 59% or £114,000.

The insurer’s research also reveals that Brighton and Bristol have the largest ‘location premiums’ outside of London followed by Edinburgh and Norwich, all of over 60%.

Rebuild cost

Some cities feature homes that sell for almost exactly their rebuild cost including Newcastle, where three bedroom houses are just £2,700 more to build than to buy.

By contrast, the gap between rebuild value and sale price is highest in the capital, where it costs £205,000 on average to reconstruct properties which are worth £647,000, a premium of 68% or £442,570.

The research has a serious point over and above shock value. Direct Line says home owners have little or no idea of how much their homes would cost to reconstruct and on average over-estimate it by 38%. This pushes up their insurance premiums unnecessarily, it is claimed.

“Although people may be surprised by the amount of value placed on a property’s qualities beyond bricks and mortar, this analysis shows just how much intangible benefits [can] add to the price of a property,” says Nick Brabham, Direct Line’s head of Select Premium Insurance (left).

His company used Zoopla figures to compile its report and looked at 12 cities across the UK.

October 19, 2018

What's your opinion?

Please note: This is a site for professional discussion. Comments will carry your full name and company.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

The Negotiator Awards Book Tickets 2018 image