Homes built by SMEs command 46% more than larger developers in current market

Research by real estate debt advisory specialists, Sirius Property Finance, has revealed that while SME housebuilders account for just one in five properties currently for sale on the market, they command a 46% price premium.

Sirius Property Finance analysed current market stock for new-build homes across the UK looking at what percentage were accounted for by the big housebuilders versus SMEs and how they differed where market value is concerned.

The research shows that 20% of new-build properties currently available on the market had come via small to medium housebuilders, with large developers commanding a far superior market share in comparison.

However, when it comes to the price these properties are fetching in the current market, SME housebuilders were some way ahead of their larger competitors.

The average asking price for a property listed by a major developer came in at £370,727, while those listed by SME developers averaged £543,108 – an impressive 46% premium.

That means for every property sold, SME developers are making £172,381 more than those sold by large developers.

Head of Corporate Partnerships at Sirius Property Finance, Kimberley Gates, commented: “The nation’s large developers have far superior resources compared to your average SME and so they predictably account for the lion’s share of new homes reaching the market. However, this mass production approach isn’t without its drawbacks and, as a result, SME developers are outperforming them where market values are concerned. This is generally down to their quality over quantity approach and while many larger housebuilders are delivering stock to all thresholds of the market, SMEs tend to predominantly focus on more unique developments, requiring a higher specification of property in locations that command the best market prices. At the same time, they also have a greater ability to utilise better materials and the final product is also finished to a higher standard in terms of quality checks and the rectification of any snagging issues.”