Are city centre new-builds the best value for money?

 

There’s been a shake-up among some city centre dwellers since the outbreak of Covid, with some migrating to the commuter belt, but where’s the best place to look for a new-build?

Towns and villages within commuting distance of some of the UK’s major cities have been inundated with interest as a result of the ‘race for space’ sparked by the pandemic. As central areas became less busy and home-working became the norm, many chose to seek a quieter life elsewhere.

However, recent months have shown some reversal in these trends. Many offices have invited staff back in at least on a hybrid basis, while some employers and employees have been keen to return to the office permanently.

From a housing perspective, this has seen appetite for properties in city centres bounce back. Meanwhile, the appeal of new-builds in general has been on the rise, particularly in light of the ongoing focus on greener living, as well as rising energy bills.

New research from Unlatch looked at this dynamic, analysing property prices in city centre locations for new-builds, compared to newly built properties in commuter belts.

City centre new-builds could be cheaper

Unlatch’s research looked at 12 major UK cities, comparing new-build house prices to those in surrounding local authorities. It found that the average city centre new-build costs £304,204, while those in the surrounding areas cost an average of £326,346 – a difference of 7%.

It highlighted Nottingham as a city centre location offering the best value for money compared with the commuter belt around it. There, new-builds come in at an average £233,047, compared with £310,213 in nearby local authorities, which is a 33% premium.

Other particularly affordable city centre hotspots included Bristol (a 27% difference between the city and its local commuter belt) and Sheffield (22%). Unlatch also noted that Manchester, Liverpool, Birmingham and Glasgow all offered particularly good value for money.

Long-term trends

We are now living in a ‘new normal’ post-Covid period, with people’s working patterns, work-life balances and location and home preferences all quite different to what they used to be. Yet it is difficult to ascertain whether these changes will be temporary.

Undoubtedly, more companies than ever are offering flexible working, which could mean commuting locations and even rural areas hold their appeal. Yet city centre living offers a unique experience that still attracts swathes of people who want amenities and work on their doorstep.

Lee Martin, head of UK for Unlatch, says: “Urban living isn’t everyone’s cup of tea, but the high cost of homeownership has traditionally pushed many aspirational buyers from the inside out, looking to the commuter belt for a greater level of affordability.

“However, this long term trend has driven heightened levels of house price growth in these ‘next best’ areas and, more recently, a reduction in demand for homes within our major city centres has also reduced as a result of the pandemic.

“The upshot is that now there are a number of major cities where buyers can secure a new home for a better price than they may find across the commuter belt.”

Return to the city

A recent survey by Nationwide found that the proportion of people looking to escape the hustle and bustle of urban life had “declined substantially”. It found that around 12% of movers were currently prioritising this in their move, including seeking more outdoor space, compared to 15% last year.

According to Emma Cox, managing director of real estate at Shawbrook Bank, poor supply levels are “insulating sellers” and this is set to continue, particularly in traditional UK housing market hotspots.

She added: “The return to city centres after a two-year hiatus and the demand for more face to face interactions again could reignite the UK’s love affair with cities such as London.”

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