New home sales accounted for 10.3% of all transactions in Hertfordshire in 2016, according to Land Registry data. The bulk of new build flats are sold for between £250,000 and £350,000. New build houses have a broader price range, but there is a clustering of transactions between £500,000 and £800,000.

Buyers of new homes in Hertfordshire tend to be aged between 30-49 years old, looking to buy their primary residence, and drawn from the local area, according to Savills dealbook data. 64% of purchasers were moving within Hertfordshire, and 84% were buying their main residence.

There is also a significant proportion of buyers, around 20%, who are moving out from London. Demand from these buyers is strongly linked to employment centres; locations with major employers in the local economy or fast links into London or Cambridge are the most popular.

^{Source: Land Registry}

Rental Demand and Investment Potential

Investors make up a small proportion of the market, amounting to only 13% of new build purchasers over the past three years. Apartments have been the dominant type of development in the major urban centres, accounting for 57% of new build sales in Watford and Rickmansworth, and 77% in Bishop’s Stortford in 2016.

Buy-to-let investors make up a higher proportion of the market here relative to locations further away from London, looking to take advantage of robust rental growth and higher yields.

We are forecasting a 19% increase in mainstream rents across the UK over the next five years. Rents in the Outer Commute zone, which includes places such as Stevenage and Letchworth Garden City, have grown by 8.4% in the past five years, with demand particularly strong for one- and two-bed properties.

Downsizers and Retirement Living

The new build market in Hertfordshire has also seen strong demand from downsizers. 29% of Savills new build buyers cited downsizing as their reason for moving, compared to 13% of those buying in the second hand market. This suggests that new build homes, particularly those designed with downsizers in mind, are providing a product that cannot be found in the existing housing stock.

The retirement housing market has traditionally focused on ‘needs’ based demand. However, over the last few years we have seen the emergence of an aspirational downsizer market. House buyers in this market are typically aged in their mid to late 60s, and seeking to unlock housing equity or move to a smaller, more manageable home, that still has spacious rooms and plenty of storage space.

Help to Buy and First Time Buyers

Help to Buy would appear to be tailor-made for many locations in Hertfordshire like St Albans, Rickmansworth and Harpenden, with first time buyers struggling to get on the property ladder due to high prices and challenging deposit requirements.

However, these areas have seen the lowest take up from the Help to Buy equity loan scheme, with only 81 sales (7% of all new build sales) supported by Help to Buy in St Albans since April 2013.

This is mainly because prices in these areas are still unaffordable to the majority of first time buyers, even when using the scheme. Instead, they have been turning to cheaper locations.

In Dacorum, 39% of new build sales since April 2013 have been supported by Help to Buy Equity Loan. There have also been high numbers of Help to Buy sales in East Hertfordshire and Welwyn Hatfield.

^{Source: DCLG}