New residential developments do not adversely affect local house prices

One of the major concerns of home owners when a new build residential development nearby is undertaken, that this will reduce property values in the local area. However, a report which has been undertaken and was commissioned by Barratt Developments, who are the largest house builder in the UK, in conjunction with the NHBC Foundation, to see what effect if any a new development would have on property prices in the immediate area. This study showed that new developments have little or no impact on local house prices; this is good news for many people as their home is the biggest investment they will ever make.

The study, which was undertaken by the London School; of Economics, looked at eight recent residential Barratt developments, this revealed that although there may be some limited impact, particularly during the construction period, once it was fully completed prices did not decline. It is naturally a common concern amongst home owners that when a new residential development is undertaken, their property prices are going to be adversely affected; this appears not to be the case.

The study centred on developments which were less than 300 units and have been completed or substantially so in the last five years. These developments were across the South of England and the Midlands and could be described as being typical of housing development outside city centres or wholly rural areas.

All of the eight sites chosen had in common that there had been objections to the development, some of which had been substantial in character. Of the eight five were built on land with previously higher amenity value, the other three had a lower amenity value including industrial sites which had become derelict. One of the specific research findings was that these developments could in fact stabilise house prices when these were completed, they could also increase prices and they concluded that there was no long term negative impacts. What did surprise some however was that in the development sites where the opposition have been the strongest, although naturally this decreased once the development was complete, at least half of all eventual purchasers of the new homes previously lived within five miles of the development.

As pointed out by Neil Smith, who is head of research and innovation at NHBC, very few would argue that more homes are not needed, but it is fine as long as it is not in my area! This is probably driven by fears of their investment falling in value as much as anything else, something which has been acknowledged by Philip Barnes, group land and planning director at Barratt Developments Plc, but this research will go a long way to allay these fears.

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