A recent study by Open Property Group highlights the short-term negative effects that future development sites can have on nearby property values. While the long-term outlook for areas undergoing development often points to increased property values due to improved infrastructure and amenities, those living next to upcoming projects might have to endure a temporary drop in their home’s worth.
The Study’s Findings
The research conducted by Open Property Group involved an analysis of property prices in close proximity to large development sites where planning permission was granted in the last 18 months. These properties were compared against the broader market prices in the same regions.
Average Decreases in Property Values
The findings reveal that, on average, properties near significant upcoming developments are valued at £359,894, which is nearly £4,000 less than similar properties in wider areas. This pattern holds true across most of England, with specific regions experiencing even more pronounced declines:
- London: Properties near developments are priced on average at £631,872, which is £9,626 lower than the wider market average.
- South West: The difference reaches up to £8,585.
- East of England: Nearby homes see a reduction of £3,461.
- West Midlands: The decrease stands at £3,426.
- South East: Homes are valued £3,349 less than the area average.
- North East and Yorkshire: Slightly lower impacts with reductions of £2,381 and £2,012 respectively.
Interestingly, in the North West and East Midlands, properties adjacent to new developments are valued higher, at £3,234 and £3,943 more respectively compared to their broader regions.
Jason Harris-Cohen, CEO of Open Property Group, commented on the dual nature of residential development impacts. He noted that while development signifies a robust and in-demand property market, with potential for future price growth, the immediate downsides can be quite challenging for current residents.
Short-Term Disadvantages
Residents living close to planned construction sites often face months or even years of disruption. This includes noise pollution, increased traffic, and the visual disturbance of ongoing construction activities. These factors naturally deter prospective buyers, compelling sellers to lower their asking prices to attract interest. Harris-Cohen emphasised that the real estate market’s benefits from new developments are usually long-term and might not compensate for the immediate inconveniences experienced by existing homeowners.
This study highlights the complex dynamics between new developments and existing residential property values. While the future might hold promise for higher property values, the current reality for many homeowners is a dip in prices driven by the challenges of living near construction sites. Potential sellers in these areas may need to adjust their expectations and possibly their selling strategies to cope with the immediate impacts of nearby developments.