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Price spike for new-build homes shows no sign of abating

9th Oct 2024
David J Alexander

While house prices in Scotland have continued to rise at a much greater rate than the rest of the UK it is true to say that there is considerable variation in these increases depending on the type of housing.

In particular, the value of new-build housing is increasing at a much faster rate than all other types of home. Indeed, this is a market which is outperforming all others as demand for something brand new increasingly appeals to buyers.

The average increase in price across Scotland for new-build homes between June 2023 and May 2024 (the latest period for which there is data) has increased by £68,931 from £247,659 to £316,931. This is a rise of 27.8 per cent in one year which is extraordinary given that average house prices for all types of homes over the same period only rose by 4.1 per cent.

There are many parts of Scotland where new-build prices have increased by around £1,000 a week. In Edinburgh prices rose by £66,037 in one year; in Midlothian it was up by £54,851; in East Renfrewshire the rise was £51,647; in East Dunbartonshire the increase was £51,398; while in East Lothian prices rose by £49,871.

By any measure these are enormous increases and show the huge demand from homebuyers for brand new homes. Many people have always wanted to own somewhere that only they have lived in, so that they can be the first to put their stamp on a property.

But there must also be an element of buyers wanting to have that combination of city and rural life. Most new housing estates are on the edges of cities and town with good links to the centres so they can offer that ideal country/city life mix that many buyers want from their lives.

In addition, newbuilds have better design with higher environmental and energy efficiency standards making them cheaper to run than existing homes which makes them more attractive to homebuyers.

Of course, buyers are paying a substantial price for this privilege, but this is because land prices have risen, with labour and material costs soaring over the last five years. The result is a new-build market that is booming and cannot keep up with demand.

Obviously, the major cities and their surrounding areas are the most attractive locations appealing to those working in and around Edinburgh and Glasgow.

But both Dundee and Aberdeen are experiencing spikes in prices for newbuilds. In Dundee average prices have increased by £32,102 which is a rise of 18.1 per cent while Aberdeen has had an increase of £28,550 which is 12.5 per cent up.

Therefore, the new-build price hike is widespread across Scotland and looks set to continue as demand remains very strong.

Given that house prices across Scotland are defying gravity it is even more extraordinary that newbuilds should be doing so well. With the level of demand remaining high I believe that these higher prices will continue for the coming year as homebuyers seek out these new developments which fulfil their environmental demands coupled with geographic convenience offering properties with outside space but access to city and town facilities. With these factors the appeal of newbuilds looks set to continue.

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