Home buyers are prepared to pay a premium of nearly 30 per cent — or an average of £134,275 — for a new flat in London, according to a study carried out by property consultants CBRE based on Land Registry data.
It found the average selling price for a new two-bedroom flat in the capital is just below £454,000. For “second-hand” homes it is less than £320,000.
“There has always been a premium for new homes — they come with a warranty and people just like knowing they are first in and that nothing will need doing on it,” says Jennet Siebrits, head of residential research at CBRE.
She believes the premium is being pushed up by the recession. With first-time buyers unable to finance a move on to the property ladder, developers are targeting wealthy overseas buyers with luxury schemes that, in turn, raise average prices.
Enthusiasm for doing up old homes has waned now that loans for major DIY projects are hard to find.
The biggest price gap is in Kensington and Chelsea, where the average price of a new two-bedroom flat stands at just over £2.3 million. A similar second-hand home costs £1.025 million - a premium of almost £1.3m or 55 per cent.
Currently on the market in Hammersmith is a second-hand two-bedroom flat in Richford Street priced at £380,000 (pictured above; Kerr & Co). The property needs modernisation but is half the price of a new flat in upmarket Miller’s Way less than half a mile away which is on sale for £850,000 (Marsh & Parsons).
In Hounslow a new flat will cost an average £425,000, whereas an older property will cost just £245,000 - a difference of £179,000.
Only in five out of 32 London boroughs, including Hackney and Brent, are second-hand flats more expensive than new builds mainly because of lack of high end new property for sale.