New analysis1 from Direct Line SELECT Premier Insurance reveals the huge gulf between the cost of building a house and its market value. With two fifths (41 per cent) of a property’s value (approx. £114,000) derived from factors such as; the quality of local amenities, transport links and schools, as well as demand for homes in the area.
Analysis of property prices for three-bedroom homes across twelve major UK cities reveal that the average house price of £277,608 is 59 per cent higher than the projected rebuild cost of a similar property, which is valued at £164,000.
The cliché of “location, location, location” appears most apt in the capital, where homeowners typically spend an average of over £647,000 for a three-bedroom property, more than three times the average rebuild cost of £205,000. The property premium (£442,571) is in fact so vast, it is higher than the average market value of homes across the UK.
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