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.