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New build properties too expensive?

Data analysed by Open Property Group reveals that new build properties may be too expensive for this generation of house buyers.

The Negotiator

new build properties expensive

Despite numerous schemes and incentives for those buying new build properties, analysis of data by professional cash buyer, Open Property Group (OPG), suggests many counties are unaffordable.

Data from National Statistics calculated affordability ratios based on ‘New Build house prices-to-workplace-based’ earnings and shows that Worcestershire is the least affordable county to buy in, scoring the highest ratio of 13.58.

The higher the number/ratio, the less affordable, on average, it is for a resident to purchase a house in their local authority district.

It was closely followed by West Sussex which had a ratio of 13.41 and Warwickshire which scored an affordability ratio of 13.23.

At the other end of the scale, the North West is the most affordable region and Cambridgeshire is the most affordable county to buy new build properties along with Cumbria and Derbyshire with ratios of 7.06, 7.58 and 8.11 respectively.

OPG Managing Director, Jason Harris-Cohen (pictured), said: “It is no secret that newly built houses carry a price premium. Buyers are paying extra to be the very first owner of a property that’s immaculately decorated, kitted out with the latest appliances and built to be energy efficient. The privilege of a turn-key ready property is, however, something that many purchasers are willing to pay for – especially in the most popular locations.

jason harris-cohen OPG“Prices in the new build sector are directly related to supply and demand. The Government is well off its target of delivering 300,000 homes a year by the mid-2020s. A skills shortage has been compounded by COVID and Brexit, with experts estimating that we won’t reach the Government’s desired level of house building until 2032.

“While there has always been a North-Side divide when it comes to the cost of buying a brand new home, our latest analysis shows the gaps are closing. It is inevitable that the ‘race for space’, where flats have fallen out of favour, and the great escape to more suburban and rural areas, is pushing up the value of new homes outside of Greater London. This is further exacerbated by the shortfall in house building.  Although it’s still possible to rank where is most affordable in terms of new home purchases, the gap between the cheapest and most expensive places is not as stark as you’d imagine.”

Most and least affordable places to buy new build properties

 

Top 5 LEAST Affordable Counties New Build House Price-to-Workplace-based Earnings Ratio
1. Worcestershire 13.58
2. West Sussex 13.41
3. Warwickshire 13.23
4. Surrey 12.57
5. Suffolk 12.02

 

Top 5 MOST Affordable Counties New Build House Price-to-Workplace-based Earnings Ratio
1. Cambridgeshire 7.06
2. Cumbria 7.58
3. Derbyshire 8.11
4. Devon 8.84
5. East Sussex 9.15

 

Affordability ratios are calculated by dividing house prices by gross annual earnings. By dividing the house price for a given area by its earnings, OPG produced a ratio which serves as an indicator of relative affordability. Earnings relate to gross full-time individual earnings on a place of work basis. The house price statistics come from the House Price Statistics for Small Areas, which refer to a 12-month period with April in the middle (year ending September).

September 3, 2021

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