South East: House Prices and New Build Premiums

South East

Introduction: The Housing Market

The South East has some of the most expensive house prices in England and is a competitive market for developers. We take a look at average house prices and the new-build premium – and how the housing market is impacted by demographics and the planning system.


Average House Prices

Despite an already-high baseline for properties in the South East, there’s been a significant increase in average house prices in some local authorities in the region. From November 2021 to November 2022 the median price of houses increased by 10% to £402,466 – close to the national average of 10.9% in England.

Out of the local authorities in the South East, Elmbridge has the highest house prices by a significant margin (£740,435), seeing an 8.9% increase since November 2021. Its proximity to London, as well as an abundance of green spaces, makes it a desirable location for people with larger budgets.

There is, however, a wide range of prices across the region. Southampton’s average property prices were nearly a third less than those in Elmbridge at £251,526 – an increase of 8.7% from the previous year.

Rother saw the largest percentage increase in average house prices increasing 16.6% from November 2021 – £338,903 to £395,163. It’s interesting to compare the house price and median age data for Rother as both have seen some of the highest jumps in the South East.

New Build Premiums

As we saw above, the house prices in the South East are consistently some of the highest in the country – but what’s the price difference between new and existing properties?

We took a look at the price-per-square-foot data and calculated how much more (or less) new houses were being sold for in areas across the country. New-build premium is the percentage difference between new and existing property prices.

For the South East, the new-build premium was minimal in 2021 at 0.08% – equating to just £0.29 per square foot. It has been steadily low for the last few years but was higher in 2019 at 4.78%.

This is a trend echoed on a local authority level too. In 2019, there were 13 local authorities in the South East that had a negative new-build premium. Compare this to 2021, where there were 29 local authorities with a negative new-build premium, and we get a clear picture of just how much the comparative value of new builds has been falling across the South East.

Typically, the local authorities with some of the highest house prices (as of November 2022) have consistently negative or the lowest new-build premiums in 2021, such as Elmbridge (-16.14%) and Guildford (-3.28%).

Oxford, however, had the lowest new-build premium in the South East at -22.83% (-£110.72 per square foot). This is a significant drop from 2019 when it was 42.19%. This may be linked to their significant delivery of new houses (they delivered 2,126% of their housing need in 2021) but there will be others that are better placed to unpack the root cause here.

The highest new-build premium in the South East was in Worthing at 78.21%. Again, when comparing this to past data, it shows a major shift. Only a year prior (in 2020), there was a negative new-build premium of -2.30%.

Some of the highest new-build premiums in the South East are in coastal towns and cities. This could be due to the lower percentage of constrained land (Green Belt, AONB, National Parks, and SSSI), meaning that there’s more un-constrained land available to build new developments.

Portsmouth and Southampton are other examples of coastal towns with high new-build premiums – 77.08% and 22.15% respectively. Not only do they have some of the lowest house prices in the region, but are also seeing significant population increases in the 20-24 age bracket who are typically seen as prime candidates for new builds. The high premiums for new properties and growth in the target market could make these lucrative markets for developers - however, the Solent region, in which these areas are located, has some of the most constrained areas for Nutrient Neutrality.

Related Resources

If you've enjoyed the data insights about the housing market in the South East, check out our other  reports for the region below: