New building developments are popping up all over Medway but how do prices compare to older properties?

I hope everyone has had a great week. I’ve been busy training my employees and implement a new property management system for our landlords, Arthur online, so look out for an update on that. It will provide our landlords with greater transparency and easy access to necessary documentation.

A few weeks ago I blogged about Medway Council’s plans to tackle the housing shortage. Building more homes is obviously a large part of that and it seems like at the moment, I am continually reading about new developments being approved. But I also read a statistic about the cost of new build properties that really surprised me. Apparently the average price of a new-build home in England and Wales is around 16% higher than an existing property. That’s not a small difference! My guess is that new houses are likely to have better energy efficiency ratings and this would therefore mean they are cheaper to run. But even so, I’m intrigued by the price gap. Latest figures from Nationwide Building Society indicated that house prices have reached a record average high this month. But those increases are expected to slow and interest rates to rise, which is cause for concern for those looking to buy property imminently. The Bank of England has reinforced this anticipated rise but even with the rise looking likely, my view is that the ongoing housing shortage will surely steady the housing market overall.

The Prime Minister’s plans to increase construction of new homes by 300,000 a year looks like the new property developments we are seeing so many of, are going to continue. So the big question is, is it worth paying more for a new-build home? And will they continue to be more expensive than old houses? My guess is that the old economic model of supply and demand will ensure that as older properties become outnumbered by new builds, this will eventually increase the value of the older properties, as original features and traditional buildings become rarer and more desirable. Having said that, the range of new build properties currently on the market in Medway is quite diverse. From 2 bed flats in Rochester from £106k to 4 bed detached bungalows in Walderslade for £595k, the location and style of properties being developed is varied.

New build houses have long had a bad reputation for small rooms and poor quality, however when chatting to a carpenter friend of mine who works on some of the local development sites, he assured me that is genuinely not the case. Of course, developers are looking to maximise the potential of the land which often leads to developments feeling cramped but for some people, the size of the garden or the number of parking spaces just isn’t important. Reassuringly he advised that building regulations are so stringent that in his opinion, many of these new builds are of an excellent standard and represent great value for money. Particularly if you choose a developer that is willing to invest in solid wood features and bespoke fitted kitchens to provide higher spec homes.

After that conversation I found it especially interesting to read in the Telegraph that Kent has been named one of the UK’s hotspots for “pre-fab” homes. Prefabricated homes built from modules made in factories are seemingly highly prevalent in Medway. There are at least two developments (in Chatham and Capstone) using offsite construction to build homes, and across Kent, it’s estimated that up to 700 homes a year are being built from factory manufactured modules. With construction of these style of homes estimated to be around 40% quicker than regular building techniques, the turnaround for construction and subsequent housing of residents could be impressively quick. Possibly as quick as four weeks. So you can see the appeal for both buyers and developers.

Developers have been dragged through the mud lately what with the ongoing leasehold scandal in which they were accused of inserting incremental clauses into their leasehold contracts. These clauses effectively doubled tenant ground rent every ten years and has bought ongoing disputes to many developer’s doors. But that doesn’t seem to have hindered the pace at which developments in Medway are springing up. In the past couple of weeks I’ve become aware of these to name a few:

  • A 14-storey block of 199 apartments on Pier Road in Gillingham being in the first phase of development.
  • Application for the next phase of development at Chatham Waters being submitted to Medway Council, which includes 193 two and three bed homes, retail units and dining areas.
  • Kitchener Barracks, a former army camp off Dock Road in Chatham, has plans for conversion to 72 flats and 94 houses.
  • A shipyard in Rochester having submitted plans for transformation into a riverside development that includes five residential blocks with commercial units on the lower levels.

That’s in addition to already established developments like Countryside’s Horsted Park, Redrow’s Temple Wharf in Strood and Manor Park in Rainham, and Persimmon’s Colonial Wharf in Chatham.

Overall I think that the new builds going on in the area are a good sign and point towards the ongoing Medway regeneration to continue for the foreseeable future. If you’d like to discuss anything I’ve mentioned here, you can email me at hasan@bullfinchproperties.co.uk or contact me on my Facebook discussion group Property Investors in Medway, Maidstone, Gravesend and Bexley.

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