As the Bank of England reduced base rates at the beginning of August for the first time in four years and homebuyer sentiment improves, many buyers will be faced with a tough choice: buy a new build property or an older property?
For many, this will depend on a multitude of factors, but the prospect of capital appreciation is an important consideration when buying a home. As growing buyer confidence and a rising number of sales in the first half of 2024 are translating into a growth in home values, we take a look at whether new builds accrue more value in the long run than older properties.
Capital Appreciation Rates
While the initial cost of buying a new build home may be higher, the long-term financial benefits can be substantial because of a number of benefits they hold over older properties.
While older properties offer desirable neighbourhoods, unique charm and character; new build homes provide modern appeal, energy efficiency and, typically, lower maintenance costs. Savings made on costs quickly add up and, the additional potential for appreciation can quickly justify the initial price difference.
In fact, Government data released for the first quarter of the year shows the annual property price increase in England for the twelve months between January 2023 and January 2024 was 14.4% for new build properties compared to the –2.0% for older properties.
There a number of reasons for this:
Strategic Location
One reason for this disparity between capital appreciation of new and old is location. As we explored previously, location is a vital consideration for homebuyers for the convenience and potential added value it provides.
New build properties tend to be strategically developed in areas which have undergone – or are currently undergoing – significant regeneration, with easy access to transport links and local amenities a priority for many property developers. The South East, for example, has some of the UK’s most ambitious regeneration projects which have elevated once quiet commuter towns into homebuyer hotspots.
Regional data highlighted that, between March and April of this year, the South East experienced the highest monthly property price increase in England at 1.4%. Property prices in Bracknell and the wider South East look set for some impressive cumulative growth over the next five years, outperforming London’s famously resilient property market to deliver healthy levels of capital appreciation in the long-term.
Find out more in our property price predictions, here.
Specifically, Bracknell has benefitted massively from the redevelopment its town centre and the opening of The Lexicon shopping centre. Since its launch in 2017, Bracknell’s property prices have increased by 10% according to Land Registry data – despite London and the South East experiencing an arduous few years in response to several wider economic difficulties.
Property Market Trends
Emerging demands, market trends and homebuyer preferences play a crucial role in the future potential of both new build and existing homes.
In recent years, there has been a huge shift in homebuyers actively seeking more energy efficient properties which has resulted in increasing interest in purchasing new builds – a shift driven by various factors ranging from lifestyle changes to wider economic considerations.
These days, new builds incorporate energy saving features, convenient home technology, and access to green spaces as standard, aligning more with this homebuyer trend than older properties. In fact, Zoopla data revealed that 85% of new build properties are rated A or B, whereas only 4% of older properties attain the same standard.
It is these innovative aspects which enable newer properties to accrue more value in the longer term as they are more adaptable to future technologies and trends without any additional upgrades you would typically require with period properties – and this is an extremely attract quality for homebuyers as they actively seek to lower utility bills.
Additionally, the rise of remote working has led to a growing demand for properties with dedicated workspaces, something which is typically included in new build residential developments. Extra amenities which satisfy a multitude of needs adds significant value to properties and the buyer.
Find out more about the advantages of new build properties in our article, here.
Warranties
Many property developers offer long lasting warranties on new builds that cover structural issues and other potentially costly problems which can be a huge draw for homebuyers. This provides added peace of mind, removing the need for expensive renovations and repairs which are commonly necessary for older properties.
New Build Apartments in Bracknell – LAUNCH EVENT
SevenCapital are pleased to announce the release of the latest phase of new build apartments at The Grand Exchange, Bracknell.
Bordering a multi-million-pound regeneration scheme which includes The Lexicon Shopping centre, The Grand Exchange offers exceptional long-term value for homebuyers looking for property catered towards modern requirements.
We’re holding an open day on Saturday 7th September, 10am – 5pm, where you can talk to our friendly sales consultants and chosen mortgage advisors. Attendees will benefit from an exclusive offer: reserve your new apartment at The Grand Exchange before the 30th September, and we will cover your first 6 months of mortgage payments!*
Register for our open day here.
*Mortgage payments up to a maximum value of £8,000. Cannot be used in conjunction with any other offer. On selected plots only.
