Location analyst CACI reports that builders are showing a much stronger interest in prime locations. After calculating affordability, CACI analysts noted that homebuilders break ground in the United Kingdom’s (UK) most expensive areas three times more than areas at the other end of the value spectrum. To back it up, the report showed that only 2% of new homes built in the UK in the last year were located in the most affordable areas of the country and experts believe it’s indicative of the growing appetite for homes in premium locations. For more on this continue reading the following article from Property Wire.
The level of appetite amongst house builders for prime residential locations is rising with more than three times as many homes built over the past year in the UK’s most expensive areas than at the other end of the housing market.
New research published by location analyst CACI has calculated the affordability of purchasing a home in each individual district in the UK based on an index it refers to as the cash gap which is the difference between the mortgage required to purchase a household and the typical mortgage available to prospective buyers on the average household income in that area.
Taken as a whole, CACI’s analysis points towards a two speed housing market, with house completion rates accelerating at a much faster rate in affluent areas than in areas that offer the easiest step on the property ladder for prospective buyers.
The research has found that there were approximately 2,500 new homes completed over the past financial year in the 25 areas deemed most affordable to house buyers in the UK. In contrast, more than three times that amount, approximately 8,500 new homes, were completed in the 25 least affordable areas.
It also found that 7% of the new homes built in the UK over the past year were located in the 25 least affordable locations, compared to just 2% in the most affordable locations.
The number of homes built in the top 25 most affordable locations has dropped by 15% compared to the previous year yet the number of homes built in the top 25 least affordable locations has risen by 24% compared to the previous year.
Some 23 of the 25 least affordable locations for UK home buyers are located in the South East of England, including 13 in London. Indeed, the London Borough of Kensington and Chelsea is the least affordable district in the UK with the average house buyer facing a cash shortfall of £949,800 when purchasing a new home.
‘The research results demonstrate the continued appetite for premium residential markets in the South East,’ said Patrick Tate, associate director of location strategy at CACI.
‘At a time of sluggish growth for the sector, the sustained demand in these areas guarantees higher and more reliable yields for house builders than alternative locations. As a result, over the past year we’ve seen a two speed housing market, with three times as many homes built in prime locations than at the opposite end of the market,’ he explained.
The top three most affordable locations in the UK were Shetland and North Lanarkshire, both in Scotland, followed by Burnley. The top three least affordable were Kensington and Chelsea, Westminster and Camden, all in London.
This article was republished with permission from Property Wire.