Recent reports have indicated that house prices in Blackburn with Darwen increased by nearly 9% in a twelve month period ending October 2019, with the average sale price achieved being £119,337, up from £109,734 a year earlier.
Similar percentage rises are also
reported in Hyndburn, where the average house sale price rose by 8.1%, from
£93,688 to £101,293.
Clearly, these increases are well above
average, with UK-wide data from Halifax reporting a 4.0% annual increase to the
end of December 2019. But what factors are at play here and could the reported
increases be indicative of other trends?
Certainly, one factor that is likely to
have played a significant role in the sale prices achieved during 2019 is the
new-build houses that have been developed and sold in these locations. With
several new- build developments in these areas, it is likely that new-build
sales represent a relatively high proportion of overall property transactions,
pushing up the average sale price.
In comparison to existing housing
stock, new-build houses often come at a relatively premium price. For many, the
benefit of buying a new-build is convenience and less maintenance, and
alongside knowing that the property and its contents are brand new, this means
the premium price can worth paying for some buyers.
As a consequence, it may well be that
there has been a “knock on effect”; with people becoming
conditioned to pay more for existing housing stock due to their relative
affordability, being seen to be “cheaper” per square foot than new-builds.
Property valuation is a
complicated process and involves many factors.
Something that is important to add here
is that this trend seems to be area specific. Interestingly, despite
a considerable number of new-build developments being constructed in recent
years, property prices in the Chorley/Leyland areas do not seem to have been
affected in the same way as Blackburn in the past year.
So what conclusions – if
any – can be drawn?
It is worth noting that the
house price data for Blackburn, Darwen and Hyndburn comes at the same time as
statistics on the number of first time buyers buying property during 2019 have
been released. First time buyers accounted for 55.7% of all home purchases in
the UK throughout 2019. With Government schemes, in particular Shared Ownership
and Help to Buy: Equity Loans, which only apply to newly built properties,
accounting for around a fifth of these purchases, this mounts up to a
significant number of new-build sales going through. Although no direct
correlation can be drawn between this and the Blackburn, Darwen and Hyndburn
house price data, it would be fair to comment that with such a large proportion
of first time buyers around, many of whom choose to buy new-builds (that are
sold for a higher than average amount per square foot), the trend for
increasing prices makes sense.
Although predictions for
house prices for the coming 12 months ahead are difficult to make conclusively,
many commentators are forecasting that the shortage of homes for sale and
relatively low levels of house-building are likely to continue to support high
prices.
Comments for this article come from Lea Hough’s team of RICS Registered Valuers. To arrange a property Valuation Report, or to speak to us about our full range of residential property services, please get in touch.