The age-old property mantra of location, location, location may well prove true when it comes to buying a home, according to new research. Data from comparethemarket.com reveals how much of the overall cost of a property is affected by the surrounding area. Regardless of the quality of the house, it seems that in key areas of the country it is location that holds a sizeable chunk of a home’s value. This is especially the case in the South of England.
It costs an average of £245,128 to buy a house in the UK; but how much of that is actually spent on the house itself and how much is generated just from the location? Below are the regions where location constitutes the biggest slice of value when it comes to property prices.
Houses in Greater London came out top when looking at how much it would cost to rebuild the property from scratch in the same location with an estimated £331,246 of a property worth £618,065 being attributed to the location of the home. In comparison, a house worth £415,388 in the South West is thought to owe £179,204 of its value to its location.
Regions where locations account for the most of a home’s value:
|Rank||Region||Price of Property||Rebuild Cost||Price of Location|
That London properties come top of the list is no surprise. Homes in the capital cost an average of £331,246 just for the location, excluding the price of the actual building.
In contrast, buyers in Scotland don’t generally pay a premium for their location, with the average rebuild cost of houses more than the average selling price.
England on the whole is the country most hit by locational price spikes, with Scotland and Wales the cheapest locations for homes, where the rebuild prices are, respectively, £41,229 and £32,822 more than the actual average home price. Northern Ireland, too, is only more expensive than Yorkshire & The Humber and the North East, leaving most of England at the higher-priced end of the scale.
In these cases where the rebuild cost is more than the property value, it’s likely that the materials used to build the house have increased in cost over time – or the cost of the labour needed to build the property has increased. This means that while the sale value of the house has remained fairly steady, the cost to rebuild it has gone up.
But in many places, the location of the house has become more expensive over the years, and now accounts for much more of the overall cost. This includes homes in the South West. Although a far cry from the hub of London, the South West’s costs are possibly as a result of the area’s reputation as a place to retire and a holiday destination. The difference in price between a rebuild and a home here is £179,204.
The South East’s homeowners are paying £143,051 for the privilege of living in the area, about 36 per cent of the total average price of a home – £401,409
East Anglia’s locational tax is 33 per cent of the price of the house: £110,808 for the location of a total average price of £338,254.
Those in the West Midlands aren’t paying quite so much for the location, with their £20,156 locational price only 9 per cent of the total house price of £228,293.
You can read the full study here