There are a lot of different levers and mechanisms that make up the housing market and affect the prices of homes both to buy and to sell. Estate agents always try to work with them to ensure that both buyers and sellers get the best price they can.
What is rather interesting is that a lot of ideas about the property market which seem like common sense are often more complicated than they appear, if not outright incorrect.
A good example of this is the idea of supply and demand. Logic would dictate that an affordable housing project such as a planned development off of Wardens Walk would not only provide houses that cost less than the surrounding area but also lower the price of nearby houses.
A lot of planning applications are objected to on these grounds, particularly by people who aim to sell in the near future or are worried about falling into negative equity.
However, is this actually true? Do new housing developments have an effect on local housing prices?
The answer, rather surprisingly, is no, at least according to a report by the London School of Economics. If anything, it could potentially lead to an increase in prices.
The study, intended as a pilot for a more involved examination of the effect new builds have on the rest of the nearby housing market, ended up providing a very fascinating upending of a common concern for many people looking to sell.
There is a sense that new housing developments create additional competition and supply, which can blunt demand, but in most cases, the opposite turns out to be true.
Whilst there was a small negative effect sometimes seen during the construction process itself, largely the result of noise, dust and the aesthetics of a nearby construction site, but this was not always an issue, and even in the times when it was the price would increase again once completed.
As this was a pilot scheme, it inherently has the issues of low sample sizes; the sites in question involved 300 housing units or lower and were located exclusively around the South and Midlands, so there might be slightly different trends in Lancashire or Yorkshire.
The aim was to explore typical developments that had seen notable objections prior to receiving planning permission, which often included an unspoken undercurrent of concern regarding nearby property prices.
One particularly amusing finding the LSE team discovered was that the people who had made the biggest objectors ended up buying the same homes they were concerned about. Once a development is completed, it often very quickly becomes part of the local area.
Given the ambitious house-building targets that were announced in July 2024, this is not the last time that the connection between housing supply and house prices will be explored, but it is also something that should not be a cause for concern.
Planning applications are only approved if they provide a net benefit and typically have strict requirements to ensure that this is the case.
