Why prices for one type of house are soaring in the UK by up to 40% in a year, despite property market slump
They have soared in value by around a third in the space of just a year
- The cost of new-build homes has shot up by around a third in the last year
- During the same period, house prices as a whole have only increased slightly
- There are a number of reasons why new-build house prices have risen so rapidly
After years of rapid growth, the UK housing market is experiencing a bit of a slump.
The average house price in England has risen by 3.1% in the last year, the latest figures show, with values falling in many areas.
In Scotland, the average house price is up by 6.4% annually but there was no monthly increase in May 2025, the latest date for which figures have been published.
However, one type of property is bucking the trend, with huge price increases recorded during the last year.
The average cost of a new build home in England has shot up by 31.6% in the last year, to £462,864, the latest House Price Index, published in July, shows. In Scotland, it has risen by 27.6% to £359,880.
During the same period, the average price paid for an existing home which is being resold has increased by 5.8% in England, to £289,750, while in Scotland it has risen by 3.1%, to £172,472.
Why is the cost of new-build homes rising so fast?
But why is the price of new build homes increasing so much faster than that of older homes?
There are a number of potential factors which could explain the huge difference.
Perhaps the biggest is that the supply of new-build homes, which have always been more popular with some buyers, is failing to keep up with demand.
Only 190,520 new-build homes were completed during 2023/24, according to figures published by the Office for National Statistics, compared with 210,810 the previous financial year and 205,150 in 2021/22.
Another factor is the rising cost of building materials and labour, which has increased much faster than the overall rate of inflation since 2020.
And a thid reason could be that new-builds are becoming more appealing due to their greater energy efficiency, especially with the cost of heating your home having risen so much in recent years.
Where are new-build house prices rising fastest?
The cost of new-build homes has risen much faster in some areas than others.
In London, the average house price for a new-build home has risen by 23.8% in the last year, which is the lowest percentage increase of any English region.
That could be due to a combination of the greater availability of new-build homes in London and the fact that the average house prices there as a whole have risen more slowly than in the rest of England during the last year.
The biggest increase in the average house price for a new build home was in the North East (39.2%) and the North West (35.0%).
Would you prefer to buy a new-build home or an older property, and why? Let us know in the comments section.