The market for new build property in Surrey is very positive, signalled by certain developments in Guildford achieving over £500 per square foot. Across the county various sub-markets for new homes can be found, but in general the demand for property is such that in many areas of the county the market is more comparable to prime areas of West and South West London (including neighbouring boroughs such as Richmond and Kingston) than the rest of the South East.

In Woking, flats are the dominant new build type, and prices are more affordable than in Elmbridge or in Guildford – the average sale price of a new property was £264,000 in the year to March 2014 according to Land Registry data.

In Guildford development ranges from town centre flats and family housing to large detached houses in the surrounding villages. Across all new property types the average sale price over the same period in Guildford was £474,000.

To the north of the county is the affluent district of Elmbridge, where the most desirable new properties in locations such as Esher and St. George’s Hill can command values around £800 psf. The average value of a new detached house in Elmbridge was £1.73 million in the year to March 2014.

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Smaller, niche developments have proved popular and can command premiums over equivalent second hand homes where they are able to offer something different to the existing stock. Mulberry Mews is a development of nine terraced houses in central Reigate, and has achieved values of around £500 psf according to Savills data. This compares very favourably with second hand values in the area, which average around £300 psf according to Hometrack. Low levels of stock in the general second hand market, particularly of high quality period properties, have reinforced the interest in new build developments.

London & local demand

Demand for new homes in the area comes from a range of sources. Older, equity-rich downsizers are attracted by the prospect of lower maintenance and running costs, along with the peace of mind that comes from new, high-spec appliances and a builder guarantee. This group are likely to have lived locally in a semi-rural location, and once they are retired or their children have grown up and left home a more urban environment becomes appealing. The centres of Guildford, Woking, Reigate and Farnham all have wide ranges of amenities such as restaurants and cafes, bars, theatres and shops.

Family buyers traditionally consisted of people moving up the ladder locally, but recently this has been supplemented by buyers moving out from London, who now make up a key component of the demand. Not only is a typical three bedroom family home in Surrey approximately 35% cheaper than an equivalent in West or South West London, but it is likely that off-street parking and a larger garden will be available.

Overall, London buyers feel that their quality of life will be enhanced by a move out of the capital. This was given as the number one reason for moving in our Spring 2014 Prime Regional Survey – 90% of buyers mentioned it.

New developments of houses are, in part, filling the gap between supply and demand that has built up due to the reduced number of “home mover” transactions following the recession. Traditionally there has been a divide between prospective buyers who are looking for period homes and those who would consider a newly built property, but there is recent evidence that this line is blurring. The former group have been moved to expand their search criteria as the supply of existing homes is so limited.

Investor confidence

Investor confidence in the local market is also strong, with professional investors returning to a market that was, since the recession, made up mainly of small buy-to-let landlords. The growth of the private rented sector in Surrey suggests that this optimism may be well founded. Census data from 2001 and 2011 shows that the total number of households has risen by 5.2%, but the number of households in the PRS has increased by 46.3%.

In certain parts of the county this is even more clear, with Epsom & Ewell, Reigate & Banstead and Woking all showing increases of over 60%. Of the 22,614 households added in a decade across the county, 21,163 were in the PRS. Based on these demographic trends demand for rental property 
is likely to remain strong.

Moving on to development, the signs are that Guildford borough in particular could be set to respond to the strong levels of demand for housing. The Draft Local Plan sets a target of 652 homes per annum – this is more than double the interim figure of 322 carried over from the South East Plan, and almost three times the average level of delivery of 226 per annum over the previous four years. Some of the potential sites for these homes are highlighted in Map 1, along with other large developments across the county.

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Taken from
Spotlight: Guildford & Elmbridge Residential Development Sales