The new build industry has witnessed an unprecedented shortage in raw materials as a result of the pandemic. Because of this shortage, the demand for new-build properties has increased dramatically. As a result, house prices for new builds look as though they will continue to rise over the next 12 months.
New build prices increasing is hardly a recent phenomenon. According to new research, the price of an average new build has skyrocketed by 272% since the turn of the century. This rate of price increases exceeds that of the wider market. There has also been a massive increase in the gap between new and existing stock. In 2000, new build homes cost £17,805 more than existing properties on average whereas in today’s market, that premium is roughly £79,426.
With added government support in recent years, the new build market has gone from strength to strength. Now, as a result of the pandemic, the industry is experiencing an unprecedented shortage in building materials which has resulted in prices for new build properties being driven even higher than before. After a year that saw 243,000 new homes built across the country (the most in over 30 years) coupled with factory closures during the height of the pandemic have led to some of the worst material shortages in memory. While this can be a hurdle for those in the industry, it has also helped to increase the prices of new build properties as demand grows. A spokesperson for the Ministry of Housing has promised that “decisive action” is being taken to ensure the country has enough new homes to keep up with demand. The spokesperson added the government had reformed the planning system and had implemented various help to buy schemes to assist potential buyers in coping with the increased prices.
With the materials shortage looking set to continue and material prices predicted to rise by 10% over the next year, new build prices are showing no signs slowing down. Research carried out by the Royal Institution of Chartered Surveyors (RICS) shows that an increase of such value is likely and would therefore most likely mean new build properties will continue to rise in price.
Much like the rest of the UK property market, the new build industry has flourished as the government look to turn ‘generation rent’ into ‘generation buy’. The combination of various help to buy schemes and the steep rise seen in new build prices has seen the market boom in recent months – and it isn’t showing any signs of letting up any time soon.