Big jumps in building cost over the last three years have hit house building viability hard. Many builders and developers now say that it is no longer profitable to build new homes. If this claim is true, and there is no denying building costs have increased sharply for several reasons, government policy to drive up the rate of house building faces a primary and solid barrier. Building one new home costs a few hundred thousand pounds. So building one alone is a big risk. . Building 1000, or building 10,000 costs millions and millions. Paying yet more for off-site amenities to fulfil local councils requirements makes the barrier to building even bigger. But there is another way of looking at the viability problem.
It is to focus on the sale price, or more accurately what the purchaser gets for their money. This is fuzzy area for some. What is clear from experience over long timescales is that in boom times, bog standard houses sell, but at bog standard prices, by which I mean the same rate per foot as any others in the neighbourhood at the same time. . And in non-boom periods bog standard new houses may not sell for months, will sell last, and eventually sell for the lowest rate per foot whilst the superior homes sell regardless. .. But in addition in boom times homes which are not bog standard, instead which are superior houses will sell for new premium prices whilst bog standard houses in boom periods will sell but only at bog standard prices. The prediction analysis can be taken further, depending upon locations and scale. . Is the location in which the new homes are located popular when compared to other locations nearby? For example near a water feature; near popular amenities, like a tube station, a well regarded school, a local park, or a fast access road network? None of this sounds like rocket-science. And it isn’t. But these taken for granted benefits, the roots of our sense of place, are also the crucial foundation stones of market recovery. Builders might complain providing these benefits is outside their power, unless they are building at scale: such as new towns or large urban extensions. My answer to them is yes and no. They, and their local councils must now step into new re-generation territory. All around our towns and villages are house building locations with these benefits already in place. Such well endowed locations are opportunity areas. Sites close to railway stations, parks, popular shopping streets, water and so one. Most will already be full of homes. The opportunity areas lie in the locations blessed with these existing spatial benefits and filled with bog standard homes. What does this mean in practice? That you are looking at a brownfield site. That you are looking at a regeneration site. That you are looking at much higher rise, at higher a higher densification site..That you are looking at a rapid regeneration opportunity area.
To release premium values needed to swamp existing use values re-building at scale in these opportunity areas needs to be , at higher density, without reliance on cars alongside existing popular benefits with clear intent to create lots more popular appeal as the final vision. .. One simple test might be, will you want to go there during the day with your children; or go there in the evening for a meal? Another test might be, if you imagine you are already living in a place and in a spot you love, how will feel having to leave it? Don’t tell me about the deterrent effect of nowhere to park the car. This is your visitors problem, and the planners problem. But not your problem as you already live there. You have already paid.
So there are several ticks in the regeneration boxes. How much more will you the home buyer pay for these privileges? This is the process that ‘creates premium values’ . And in the process pays for all those extra add on costs. Bin the suburban standard estate. Bin the failed urban tower. Go and look at best practice around the world. And persuade your council they must deal with you, and you alone.
But you are a small builder who does not have the power to deliver these benefits? Welcome, I say to the world of competition. But don’t wait around in the hope the market will turn again as it often does to the same start . By then councils with foresight will have hitched all their best brownfield sites to builder partners, and who will already be buying in the key sites.
Ian Campbell
19 October 2025
