There is still immense pressure for the government to support developers, to achieve and deliver the target of One

million New Homes before 2020. A lack of skills continues to be a major, contributing, factor to this. LSL Land &

New Homes looks at the current prices of new build properties, and questions if the government plans are realistic.

Shaun Peart, managing director of LSL Land & New Homes (www.lsllandandnewhomes.co.uk), explains:

“The year on year price change to end September 2015 has

remained relatively static again this month at 6.5%. Whilst

most commentators seem to agree on a relatively flat market,

the most interesting trends are perhaps those noted by e.g.

the RICS and Land Registry which point to excess demand,

relative to a static or falling supply of property for sale. There

seems to be universal agreement that too few houses are

being built and that there is clear political backing for an

increase in the overall volume of new build. However a recent

survey pointed to skill shortages being a very important

constraining factor in the supply of housing and there

doesn’t seem to be a short term solution to this issue.

But when the data is examined more closely, an interesting

emerging trend can be seen. The New Build Price Index tracks

year on year changes and so compares the average price in

each region in the year to September 2015 with the Year to

September 2014. The year on year price growth in Greater

London, as measured by this index, peaked in November

2014 and has been gently falling since that time. In the

year to September 2014 it stood at 14% and in the year to

September 2015 it stands at 10%, a fall in the year on year

growth rate of 4%. Over the same period the figures for

East Anglia and the South East have risen by roughly 4% to

now stand at a little over 8% (a doubling over the year).

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Data sources: LSL New Build House Price Index | ONS, EARN05 – Average weekly gross earnings of full time employees, by region.

LSL New Build IndexThe market indicator for New Builds October 2015

• AverageNewBuildpriceriseremainsstatic,at6.5%,totheendofSeptember2015.

• GreaterLondon’spricegrowthpeakedinNovember2014–Datasuggests14%growthinSeptember2014, comparedtoonly10%inSeptember2015.

• EastAngliaandTheSouthEastexperiencethestrongestincreasesandthereforepredictingtheywill overtakeGreaterLondon,beforetheendof2015.

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Looking at the chart opposite it seems

probable that East Anglia and the South

East will overtake Greater London before

the end of 2015. It is worth keeping in

mind though that people may be moving

to the lower priced boroughs of London

as transport links improve, in which

case falling year on year prices could

be accompanied by buoyant demand.

The table on the right shows the

percentage price change, year

on year, for each region.

Commentators are increasingly

making reference to high residential

prices in Greater London and are

considering the economic and social impacts of this. This is

the driver behind much of the Government’s housing policy.

The First Time Buyers HPE Index looks at the average cost of buying

a 70 sq m 2 bed home in each region. It compares this with the

average earnings of a full time employee in that region. On average

a 70 sq m home costs the equivalent of 5 years and 4 month’s

gross earnings. But there is a wide regional variation in this figure.

In Greater London you would need to be paying 11 years and 2

months Gross Earnings (before tax and other deductions are

made) to buy your starter home. So this will translate into a large

mortgage being paid off over a long period of time. If however

you lived in the East Midlands, you would be paying 3 years and

10 month’s worth of Gross Earnings to buy your starter home.

This of course translates into a far smaller mortgage which can

be paid off relatively easily by someone on average earnings.”

2 bed 70 sq m  Ave annual earnings  Affordability

Starter home Full Time employees HPE Index

East Anglia 188,539£             31,234£           6.04 113

East Midlands 107,046£             27,809£           3.85 72

Greater London 397,828£             35,619£           11.17 209

North East 98,069£               24,752£           3.96 74

North West 119,826£             27,049£           4.43 83

Scotland 135,277£             29,110£           4.65 87

South East 200,943£             34,082£           5.90 111

South West 154,667£             27,906£           5.54 104

Wales 121,781£             26,466£           4.60 86

West Midlands 129,688£             27,995£           4.63 87

Yorkshire and the Humber 106,054£             27,174£           3.90 73

Average 5.33 100

This is based on a weighted calculaUon which reflects regional 

differences in sales volumes of flats and terraced property

Jan to Mar 2015 earnings data

Regions Yr to Sep 15 Yr to Sep 14

East Anglia 8.5% 4.5%

East Midlands 5.5% 3.6%

GreaterLondon 10.1% 14.1%

NorthEast 1.4% 1.2%

NorthWest 4.3% 2.9%

Scotland 3.2% 1.5%

SouthEast 8.2% 4.8%

SouthWest 4.0% 4.9%

Wales 1.8% 2.5%

WestMidlands 5.4% 2.7%

YorkshireandtheHumber 2.3% 0.9%

Average excluding GL 4.4% 2.9%

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Average New Home Prices

*Size adjusted average price

PeriodOctober2014toSeptember2015and%variationoversameperiod2013/14.

SCOTLAND £ AVERAGE %+/-

£259,933 2.1% ↑

£138,205 4.1% ↑

£165,812 2.0% ↑

£189,448 7.9% ↑

NORTH EAST £ AVERAGE %+/-

£260,329 4.6% ↑

£106,067 0.2% ↑

£153,060 -2.7% ↓

£143,216 0.4% ↑

NORTH WEST £ AVERAGE %+/-

£292,871 5.3% ↑

£127,498 2.6% ↑

£170,432 3.6% ↑

£163,331 5.6% ↑

YORKSHIRE & THE HUMBER £ AVERAGE %+/-

£271,774 4.6% ↑

£116,586 1.2% ↑

£153,170 0.1% ↑

£150,638 2.2% ↑

WEST MIDLANDS £ AVERAGE %+/-

£314,945 4.6% ↑

£136,871 8.0% ↑

£194,293 4.8% ↑

£184,594 4.8% ↑

EAST MIDLANDS £ AVERAGE %+/-

£283,005 7.3% ↑

£108,753 5.6% ↑

£170,353 2.8% ↑

£161,283 5.0% ↑

-1.1%

WALES £ AVERAGE %+/-

£240,271 -0.7% ↑

£139,505 6.0% ↑

£163,949 1.7% ↑

£165,785 4.5% ↑

EAST ANGLIA £ AVERAGE %+/-

£382,462 12.2% ↑

£201,534 7.1% ↑

£250,503 7.3% ↑

£251,008 7.3% ↑

SOUTH WEST £ AVERAGE %+/-

£343,038 2.8% ↑

£169,064 5.0% ↑

£216,761 3.8% ↑

£212,145 4.2% ↑

GREATER LONDON £ AVERAGE %+/-

£685,961 13.2% ↑

£392,303 10.4% ↑

£461,676 7.8% ↑

£469,577 6.3% ↑

SOUTH EAST £ AVERAGE %+/-

£467,595 7.9% ↑

£205,538 8.6% ↑

£302,937 9.3% ↑

£281,165 7.2% ↑

Detached

Flats

Semis

Terrace

13.2%

LARGEST % DECREASENORTH EAST

GREATER LONDONLARGEST % INCREASE

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This Index has been prepared by e.surv using anonymised data

based on a proportion of all new build valuations provided for lending

purposes. Figures represent 12 month rolling averages for each

period. The copyright and all other intellectual property rights in the

Index belong to e.surv. Reproduction in whole or part is not permitted

unless an acknowledgement to e.surv as the source is included. No

modification is permitted without e.surv’s prior written consent.

Whilst care is taken in the compilation of the Index no representation

or assurances are made as to its accuracy or completeness. e.surv

reserves the right to vary the methodology and to edit or discontinue

the Index in whole or in part at anytime.

e.surv (www.esurv.co.uk) is the Valuation business of LSL Property

Services plc (www.lslps.co.uk) and is the UK’s largest residential

valuation practice, acting for lenders, developers, Social Housing

organisations and other stakeholders in the residential property

market.

The business employs circa 450 chartered surveyors and covers the

entire UK.

LSL Land & New Homes is a trading style for members of the LSL

Property Services Group Estate Agency Division, one of the leading

residential property services groups in the UK. It’s strategy is to create

partnerships with developers and builders to support their objectives

and add value to their businesses.

It can provide integrated solutions for their benefit drawing on the

expertise of companies who are also under the LSL Group umbrella

including valuation services (e.surv), rental portfolio services, asset

management services and estate agency services fronted by well-

known high street estate agency brands like Your Move and Reeds

Rains. Services can be tailored to suite individual needs from bespoke

site sales and marketing, agency referral to the disposal of part

exchange, assisted schemes and new build stock, land sales and

acquisitions.

Data for the LSL New Build Database is collected off the web sites of over 300 house builders on a rolling quarterly basis so giving a rough timeline of when sites start and finish and how many units have been built.

PLEASE NOTE: The majority of new build market activity data is quite historic, being based on returns made via the NHBC or Local Authority completions data. The LSL New Build Database tracks the new build activity of over 300 leading house builders with data collected from their websites on a rolling quarterly basis so giving a rough time line when sites start and finish and how many units have been built.

Disclaimer: The data is provided by LSL Land & New Homes and is based on data provided as described above. While reasonable skill and care has been taken in the preparation of the data – the copyright and all other intellectual property rights of which belong to e.surv limited - neither e.surv Limited nor LSL Land & New Homes can accept liability for the accuracy or completeness of the data provided.

Reproduction in whole or part is not permitted unless an acknowledgment to e.surv Limited is included. No modification is permitted without e.surv Limited’s prior written consent.

No warranty of the figures is given and no responsibility or liability of any nature to you or any third party for the whole or any part of its content is accepted. It is assumed that you will carry out your own due diligence before proceeding with any proposals or making any financial commitments.

Forfurtherinformationorenquiriesregardingtheunderlyingdataofthe

LSLNewBuildIndex,pleasecontactRichardSextonviaemail

richard.sexton@esurv.co.ukorbyphoning07968 932118.

For further information about the LSL Property Services Group including

LSL Land & New Homes and e.surv, visit www.lslps.co.uk

Notes