The latest analysis from quick sale specialists, Open Property Group, has found that while the residential or commercial development of an area may signal the potential for long term house price appreciation in the future, homeowners living close to a site due for development could see thousands of pounds knocked off the value of their home in the short term.
Open Property Group analysed data looking at the average asking of homes within arm’s reach of large development sites where planning permission had been granted within the last 18 months, before comparing this average price to the wider asking price in each area.
The research shows that, on average, homes close to a large incoming development averaged £359,894 on the current market. This was almost £4,000 less than the asking price found across the wider area.
In fact, the figures show that in all but two regions of England, the presence of a large development with planning permission recently granted can have a detrimental impact on the value of nearby homes.
Nowhere more so than in London, where homes close to such developments command an average asking price of £631,872, some £9,626 less than the average asking price of comparable properties within the wider area.
In the South West, homes close to an incoming development are valued £8,585 below the wider asking price within the area, while this dent on property values also sits at more than £3,000 in the East of England (£3,461), West Midlands (£3,426) and South East (£3,349).
The impending construction of a large new development also impacts house prices in the North East (£2,381) and Yorkshire (£2,012), however, across both the North West and East Midlands, the figures show that surrounding homes command £3,234 and £3,943 more respectively.
CEO of Open Property Group, Jason Harris-Cohen, said, “Generally speaking, residential development is a positive sign for a local housing market and demonstrates that not only is the property market performing well and in demand, but there could also be future price growth on the horizon as the area is improved and more buyers are drawn to it.
However, this is very much a long-term benefit and one that may take some years to materialise depending on the time frame set for the completion of the development in question.
In the meantime, those already living within close proximity to a proposed development site are facing a prolonged period of construction, which brings with it additional noise, increased traffic and the potential eyesore of a construction site.
So it’s hardly surprising that it has a detrimental impact on existing property prices, as sellers struggle to sell the future benefits to today’s buyers. It’s also likely that many sellers are reducing their asking prices in order to sell their home quickly and make their move before construction work begins.”
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