New home development promotes house price growth

In all cases there was a strong positive correlation between the number of new homes built in a region and the rate of house price growth.

On average over the last year, each region saw house price growth of 0.63% for every 1,000 new homes completed in that area. Over the last three years, the figure was 0.16% and the rate was 0.23% over the last five years. (See graphs below)

The research shows that housebuilding activity makes a significant contribution to the prosperity of an area, and that NIMBY fears over the financial impact of new homes are unfounded. Developers look to build wherever there is likely to be demand, and their investment typically attracts other businesses and residents to enter the area in turn, boosting the local economy.

Steve Lees, Director at smartnewhomes, comments:

“House builders would not apply for permission to build new homes in an area if there was not a demand from homebuyers. By responding to this demand, be it from first-time buyers who provide impetus from the bottom rung of the property ladder or from families who might otherwise move away, housebuilding makes a significant and lasting contribution to building prosperous local economies.

“I would urge local authorities and communities to recognise the importance of the housebuilding sector in creating thriving communities, and to work to facilitate development for the benefit of all their local residents.”

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