The ‘New Build Premium’ is real, and it can add thousands or even tens of thousands onto the value of a home. For developers, this can be significant and make a big difference to the profitability of your project.
We know that the South East is already a property hotspot, but the scale of the potential premium is stark. In early 2025, the average price of an existing home in the South East was £441,000 compared to £467,000 for new builds – a £26k difference. Nationally, the picture is even clearer, with new builds selling for £33,514 more than the national average of £314,587 for existing homes.
But what is it? What contributes to it? And why is it important for buyers?
Let’s find out.
What is the New Build Premium?
Put simply, new build homes tend to command a higher price compared to their existing counterparts, for several reasons:
Moving in is simple
It sounds obvious, but moving into a home where all the units, appliances, flooring, and paint are new can be a significant draw for some buyers. Instead of having to redecorate, replace things or fix the odd issue, it’s just a case of moving in and unpacking.
New appliances & fittings
In addition to not requiring repairs, new appliances and fittings should also last for a long time without breaking down or needing to be updated.
Things like a new boiler and central heating system should be more efficient. Double- or even triple-glazed windows will work better and last for decades. All the plumbing and wiring will be up to the latest spec. And walls and roofs will be fully insulated.
In fact, it’s estimated that more than 80% of new-builds have an A or B energy performance rating, compared with only 2.2% of older homes.
No onward chain and buyer incentives
Provided the building is ready, there is no upward chain that could delay moving in and incur additional costs. Some developers may also offer incentives for first-time buyers, as well as guarantees on the build itself.
Utilities and smart tech
Although not limited to new builds, many of them also have modern smart tech already installed, and have access to important utilities like fibre broadband and adequate power supplies for EV charging, as well as renewables like solar panels and heat pumps.
The combination of factors has led to an increasing number of buyers considering a new build, despite the extra cost. For example, nearly half of all homemovers would consider a new build property, and they now account for 1 in every 8 properties sold across the UK.
What does this mean for property developers?
For property developers, the new build premium can have a significant impact on the final asking price of their project, especially if it is in a desirable area and matches local demand.
To make their property even more attractive, developers can offer extended warranties, incorporate green tech such as solar panels or triple-glazed windows, and even EV charging.
Also, if you find a buyer before the project is completed, you can work with them to offer a degree of customisation to the final build. Not only does this ensure they get the house exactly as they’d like, but they can also specify certain appliances and features to be incorporated early, as opposed to retrofitting them at cost. This could include anything from extra storage space, a double driveway or features in the garden.
What do property developers need to consider?
One of the main considerations for property developers is the law of diminishing returns, and balancing adding desirability for the buyer against the overall budget, especially if you’re targeting the lower end of the market.
For example, a buyer of a large, detached family home may expect to see higher-end fixtures and fittings, renewable energy generation, and tech like underfloor heating. In contrast, trying to sell the benefits of an expensive kitchen or bathroom in a home aimed at first-time buyers may not translate to a higher sale price.
For inexperienced developers, this is often a good time to lean on local experts and partners, who know what buyers are looking for and what is likely to provide a healthy return. For example, we’ve worked with property developers across the South East to provide development finance and offer our expertise, and have a catalogue of successful completed projects to show for it.
We have a range of property development finance options to suit any developer’s needs, and we can typically offer an agreement in principle within a week. To find out more, contact us today!
