Direct Line SELECT Premier Insurance found that 41% 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% 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.
After London, Brighton has the second highest location premium, with residents on the south coast paying more than double the estimated rebuild cost to purchase a property in the city. This is followed by Bristol, Edinburgh and Norwich, all of which have location premiums of 60% or higher.
Source: Direct Line SELECT Premier Insurance 2018
Further research conducted by SELECT reveals the public have little to no idea of the amount it would cost of rebuild their property, with British adults estimating it would cost an average of £226,750 to rebuild a three-bedroom house, 38% more than the actual cost. As a result homeowners could be using an inaccurate figure when buying home insurance and therefore increasing the cost of their building insurance unnecessarily.
Nick Brabham, Head of SELECT Premier Insurance, commented: “Although people may be surprised by the amount of value placed on a property’s qualities beyond bricks and mortar, this analysis shows just how much intangible benefits such as; local amenities, location and transport links add to the price of a property.
Wherever you live in the country and whatever the property premium on your home, it is vital that you value the rebuild cost of your property accurately. This will help ensure you are suitably covered especially if your property has bespoke features, if it’s listed or made of non-standard construction materials. For many, the impact of under-insurance is only realised when it’s too late, but this is preventable.”
Belvoir Liverpool Central sales tea can be conatcted on 0151 231 1613 (option 1) or email us at liverpoolcentral.sales@belvoir.co.uk
