New Build capital appreciation soars, according to ne…

Scottish new build house average prices have soared ahead of existing homes according to analysis of the latest statistics by a prominent property firm.

DJ Alexander Ltd, the largest lettings and estate agency in Scotland, says the monthly house price index shows that between December 2022 and November 2023 (the latest period for which there is data) the average price of a new build in Scotland increased by £54,389 from £246,906 to £301,295 which is a 22.0% rise over 12 months.

Over the same period the average price of an existing property increased by £3,372 from £180,093 to £183,465 which is a rise of 1.9%. Over this period there was a 21.6% year-on-year fall in the volume of new build sales while existing home sales also fell over the same period but only by 12.5%.

While all four of the major cities of Scotland showed double digit percentage increases in new build prices – up 16.4% in Dundee; 15.5% higher in Edinburgh; 11.3% more in Glasgow; and 11.0% in Aberdeen – the largest increase in existing properties was in Dundee at 3.4% and 3.3% in Edinburgh while in Aberdeen and Glasgow prices fell by 1.2% and 0.7% respectively.

David Alexander, the chief executive officer of DJ Alexander Scotland, says: “These figures highlight a substantial difference between new build prices and existing homes. The drop in the volume of new build home sales will have played a part in the rising prices but it is clear that there a number of factors in play causing these price differentials.

“New builds generally 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. But the sector has also been hit by rising material and labour costs coupled with more stringent costly energy systems which have resulted in considerably higher build costs which are passed on to the homebuyer.

“However, it is clear that the continued growth of new build sales is critical to the wider property market in Scotland and the lower volumes during this 12-month period is concerning. At a time when it has never been as important for more homes to be built in Scotland it is essential that volumes increase to meet demand.”

“But the reason for this substantial price growth could simply be because many of the newer properties are conveniently placed on the edges of cities ideal for commuting across the major parts of Scotland so you may live on the west of Edinburgh but work in Glasgow meaning a newbuild on the edge of the capital works better than a traditional home in the centre.

“Interestingly, this is a very recent phenomenon. In the three years between December 2019 and November 2022 newbuild prices rose by £51,563 across Scotland which is less than the total increase in the most recent 12-month period. Existing property prices rose by £36,844 over the same here-year period so were similar to the newbuild rise. Therefore, this may well be a combination of a number of factors from more efficient heating, convenient locations, and a shortage of newbuilds being available, all combining to create the current rapid price increases.”

Average house price increases between 12/22 and 11/23 for newbuilds

Average house price increases between 12/22 and 11/23 for existing properties