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Your capital is at risk and investments are not covered by the Financial Services Compensation Scheme (FSCS). Read our full Risk Warning

How property investors can benefit from the rise in new-build homes

Article

Data released this summer (2021) by the Ministry of Housing, Communities and Local Government (MHCLG), show that new-build development is stronger than ever. This, coupled with the need for increased housing supply, presents opportunities for anyone interested in property investments.

 

How many new-build homes are there in the UK?

In 2019-2020, 244,000 new homes had been completed – a slight increase from the year before. Prior to this, the number of new-builds constructed rose steadily, with final tenure of the majority of these homes within the private residential market.

In the first quarter of 2021, figures from MHCLG reveal that just over 49,000 new homes were completed. This is a 4% increase compared to the previous three months.

In addition to these completed homes, building began on a further 46,000 new homes, an increase in 7% compared to Q3 2020. These numbers also represent the highest number of new homes being built in almost 15 years.

 

How many homes does the UK actually need?

A government research briefing sets out the urgent need for new homes in the UK. Current estimates suggest that up to 345,000 new properties are needed every year in England alone. Underlining this are figures from Zoopla, which show total stock of homes for sale is down by 26% from 2020 – a scenario they predict will remain as we head into 2022. This decrease is directly at odds with a 21% increase in the demand for homes

To address the issue, ambitious targets have been set by the government who aim to build 300,000 new homes by the mid-2020s.

There are multiple reasons for this increased need in housing, but the root cause can be attributed to the lack of construction over time. Despite the fact housebuilding has increased in recent years, it is far below its peak in the late 1960s where reaching the current target of at least 300,000 new-build completions was a reality.

 

Why do new-build homes appeal to homebuyers?

A survey by the Home Builders Federation (HBF) illustrates homebuyers increasing satisfaction and confidence in new-build properties. Questioning more than 76,000 new home buyers, HBF found that 91% would recommend their builder to a friend (2% more than last year and 7% more since 2016). An overwhelming majority (88%) also described themselves as satisfied with the quality of their home.

In addition, there are tangible advantages to new-build properties, including the fact many are chain free and built to be more energy efficient, helping keep running costs to a reasonable level.

 

How strong is the market for new-build homes?

The housing market as a whole has demonstrated impressive resilience over the last 18-months, driven in part by the Stamp Duty holiday but also thanks to homeowners reassessing priorities in light of the pandemic.

For new-build homes in particular, this resilience is supported by a sustained rise in average sale price. While the gap between new-builds and existing property has traditionally favoured the former, the gap has increased significantly over the last few months.

Based on the most up to date Land Registry data from May 2021, the average price of a new-build home stood at £329,801 – a 12% increase compared to May 2020. In contrast, the sale price of an existing home has increased 9% year on year.

This sustained price increase (against existing buildings and the market as a whole), combined with housing need and consumer satisfaction, places the new-build property market in a strong position in the medium to long term.

For opportunities to invest in property with Acorn, you must be a high net worth individual or a self-certified sophisticated investor. For more details, contact us on investor.services@acornpg.org or call us on 0203 858 9881.

 

 

YOUR CAPITAL IS AT RISK IF YOU INVEST

Investment opportunities available via Acorn Property Invest are exclusively targeted at exempt investors who are experienced, knowledgeable and sophisticated enough to sufficiently understand the risks involved, and who are able to make their own decisions about suitability of those investment opportunities. All investors should seek an independent professional investment and tax advice before deciding to invest. Any historic performance of investment opportunities is NOT a guide or guarantee for future performance and any projections of future performance are not guaranteed. All investment opportunities available via Acorn Property Invest are NOT regulated by the Financial Conduct Authority (FCA) and you will NOT have access to Financial Services Compensation Scheme (FSCS) and may not have access to the Financial Ombudsman Service (FOS).

 

 

 

Disclaimer

Investing in equity opportunities such as those promoted by Acorn Property Group, involves risks including loss of capital. Investments made through Acorn Property Invest are not covered by the Financial Services Compensation Scheme (FSCS).  PLEASE CLICK HERE TO READ THE FULL RISK WARNING

Acorn Property Group is a trading name of RST Group Holdings Limited, incorporated in the UK with company number 10719614. The registered office address is Kemp House, 152-160 City Road, London EC1V 2NX. RST Group Holdings is an Appointed Representative (FRN 908851) of SeedTribe Limited, who are authorised and regulated by the Financial Conduct Authority (FRN 695526).

To view the content, you must be either: (a) High Net Worth Individual or (b) Self-Certified Sophisticated Investor. If you do not meet these criteria, you must not take any further action. This website assumes you have a clear understanding of investments of this type and is provided to prospective investors to evaluate the investment being offered. Before you will be able to view the offering, you must certify your investor status.

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