Paying for the Postcode

It costs an average of £245,128 to buy a house in the UK; but how much of that is actually spent on the house itself, from bricks to baths, and how much is generated just from the location?

Research from comparethemarket.com indicates which regions are the most expensive in terms of the location alone, based on a comparison of the property sale price and the rebuild cost – which is how much it would cost to rebuild the house in the same place, were it to be destroyed beyond repair, calculated from size, materials, and age.

High price highlights

England on the whole is the country most hit by locational price spikes, with Scotland and Wales the cheapest locations for homes, where the rebuild prices are, respectively, £41,229 and £32,822 more than the actual average home price. Northern Ireland, too, is only more expensive than Yorkshire & The Humber and the North East, leaving most of England at the higher-priced end of the scale.

In these cases where the rebuild cost is more than the property value, it’s likely that the materials used to build the house have increased in cost over time – or the cost of the labour needed to build the property has increased. This means that while the sale value of the house has remained fairly steady, the cost to rebuild it has gone up.

But in many places, the location of the house has become more expensive over the years, and now accounts for much more of the overall cost. The places where the location takes more of a toll on the overall house price include:

• London – Perhaps unsurprising due to the increasingly densely packed nature of the capital and its popularity as a hub for workers, London charges more for the location than anywhere else – at a price of £331,246 for the area alone.
• South West – A far cry from the hub of London, the South West’s costs are possibly as a result of the area’s reputation as a place to retire and a holiday destination. The difference in price between a rebuild and a home here is £179,204.
• South East – The South East’s homeowners are paying £143,051 for the privilege of living in the area, about 36% of the total average price of a home, £401,409
• East Anglia – East Anglia’s locational tax is 33% of the price of the house: £110,808 for the location of a total average price of £338,254
• West Midlands – Though the area is still a price boost to the local houses, those in the West Midlands aren’t paying quite so much for the location, with their £20,156 locational price only 9% of the total house price of £228,293.

Most expensive regions:

A representative from comparethemarket.com said: “When the average price of a small house in London is enough to buy a family home further afield, it’s obvious that you’re paying for the location – probably because space in the capital is a lot more limited.

“But knowing how much more you’re paying for a house in one area just because of the region itself can come as a surprise. It’s important that everyone is informed of what the money means and how it’s broken down in a major purchase.”

For more of the regions charging a premium for their space, see the full study on comparethemarket.com.