Successful neighbourhoods and cities reinvent themselves as the way people live and work changes. While for businesses, what worked a generation ago doesn’t always work today. As town and city centres have changed, housing has played an ever-growing role in their regeneration. While new housing can be controversial, it forms a much larger part of new town and city centre planning than it has ever done in the past.
In this piece of analysis, we look at how pioneering homeowners who bought into regeneration schemes have fared. We also look at what it has meant for homeowners who live nearby, compared to those who live further from a regeneration scheme. Our analysis follows the lifecycle of those buyers who bought into regeneration schemes and compares them to those who bought a new home elsewhere.
Firstly, despite being brand new communities, homes in regeneration schemes have staying power, more so than surrounding streets. 90% of people who bought into a regeneration scheme and sold in the last 12 months had lived there for more than five years. On average, they owned their property for 13.4 years. This figure is almost identical to someone who bought a new home elsewhere but is around six months longer than a seller of a second-hand home nearby.
While those who buy into regeneration schemes stay for slightly longer than those who don’t, they also tend to enjoy more price growth. The average seller of a newbuild home in a regeneration scheme saw price growth of 54% over the 13.4 years they owned their home. This compares to 45% for sellers of new homes elsewhere. This is a premium of 9% and in cash terms, this equates to an extra £43,000 over their period of ownership. In London this figure is slightly larger at 15%.
For those living nearby, in the streets surrounding the regeneration scheme, it was a similar story. The removal of what are often industrial buildings tends to have a positive impact on the value of surrounding homes. Sellers in the same postcode sector as the regeneration scheme saw the value of their home rise 8%, or £79,000 more over an average of 13 years, than sellers further away.
For owners buying into the new regeneration scheme, its size made very little difference. Small schemes (under 25 homes) saw an additional uplift in value of 10% over new homes elsewhere, while both medium-sized (25-50 homes) and larger schemes (50+ homes) saw a premium of 8%. Conversely, for people who live nearby, it’s larger schemes that provide the largest uplift in value for their own homes when they come to sell.
Regeneration schemes are perhaps among the least controversial new home developments. Typically this is because they almost always replace underused or run-down commercial, industrial or even residential buildings. But our analysis also shows that these new communities are both sustainable places to live where people are more likely to stay longer, as well as solid investments where price growth has outperformed greenfield new home developments.