Savills Research, part of The Value of Community report from the Prince’s Foundation, compares the walkable, mixed-use, sustainable urban extensions Fairford Leys in Buckinghamshire and Poundbury in Dorset with the local markets. Key findings:
Savills Research, part of The Value of Community report from the Prince’s Foundation, compares the walkable, mixed-use, sustainable urban extensions Fairford Leys in Buckinghamshire and Poundbury in Dorset with the local markets. Key findings:
- Residential development values per hectare are significantly higher for these schemes, built on the principles of sustainable urbanism
- Values per hectare in Poundbury are 43% higher than Dorchester. In Fairford Leys they are nearly double neighbouring Aylesbury and +42% versus a nearby typical suburban residential development (based on current or equivalent current new build values on the developments)
- Property values are retained over time with little erosion of the new build premium in Poundbury particularly
- House prices and sales activity in Poundbury prove more resilient to the market cycle than in neighbouring Dorchester: resales have achieved a 25% average premium over the local market and market transactions average 7.8% of private stock
Housing built on the principles of sustainable urbanism with an emphasis on character and community achieve higher residential development values and can maintain house price premiums, according to the latest research from international real estate adviser Savills.
The research was commissioned to accompany a new study, The Value of Community, by the University College of Estate Management on behalf of The Prince’s Foundation, which clearly demonstrates a link between housing type and social and health benefits – so-called ‘social capital’.
Building real estate value: Examining the legacy of Fairford Leys and Poundbury – urban extensions to Aylesbury in Buckinghamshire and Dorchester in Dorset, each boasting strong sustainable urbanism credentials – researchers found significantly higher residential development values compared to the local towns.
Based on equivalent current new build values, Savills found that residential development values per hectare in Fairford Leys are nearly double those in Aylesbury (96% higher) and 42% higher than in Berryfields, a typical suburban residential development nearby with fewer features of sustainable urbanism. Even at today’s second hand values, Fairford Leys achieves a premium over both Aylesbury (70%) and Berryfields (24%).
Meanwhile in the on-going Poundbury scheme, residential development values per hectare are 43% higher than those in Dorchester.
The research also shows homes hold their value at Poundbury in particular. Buyers are prepared to continue paying premium prices when homes are resold with house price growth between first and second sales keeping pace with that in the prevailing local market.
Dr Lucy Greenwood of Savills comments: “The report explores the social value of developments with community and character. At the same time, we were asked to examine the associated financial rewards. The residential development premiums clearly demonstrate the potential for landowners and developers and it’s evident that these homes (and their setting in creating a mixed use sustainable development) continue to appeal to buyers.
“New build properties typically command premium prices compared to the local market because of minimal maintenance costs in the first ten years. And that premium is usually eroded to some degree when resold.
“However, Poundbury bucks that trend and retains its value particularly well. Over the life of the development, resales have achieved a 25 per cent average premium over the local market. What’s more, there is no erosion of the new build premium and house prices between the first and second sale have increased by 0.6 per cent more per year compared to growth locally.. It has also proved more resilient than Dorchester, maintaining activity throughout the housing market cycle in contrast to the rest of the country where transaction levels are currently 29 per cent below their pre-Global Financial Crisis (GFC) average.”
“Homes that were resold at Fairford Leys while it was still being built achieved the same value per square foot premium as those that were new to the market (27 per cent over the second hand market in Aylesbury). And while, as expected, the price premium has to a degree been eroded over time, buying there is still 11 per cent more expensive than the local market today despite the scheme being completed more than ten years ago.”
Ben Bolgar, senior director at the Prince’s Foundation, adds: “Given the robustness of the findings for both the economic and social values, it should equip local authorities, policy makers, landowners and investors with the confidence they need to forcefully resist soulless monocultural housing estates in favour of well-built, diverse and walkable places.”
For further detail about The Value of Community report https://www.ucem.ac.uk/news-events/news/new-report-shows-direct-link-between-community-and-social-capital/