New Rightmove tool shows price per square metre falling in real terms

Forget the Boris Bounce - this might be the Rightmove Retreat. A new tool produced by the portal measures price per square metre (as shown in asking prices) and it reveals that in real terms the average price has fallen over the past year.

The new calculator produced by Rightmove shows that on average across England and Wales price per square metre is up 0.8 per cent in the past year - that’s under half the rate of the government’s Consumer Price Index measure of inflation, currently at 1.8 per cent.

The portal says that the data thrown up by the tool shows wildly different values per square metre in different locations.

The analysis is based on over nine million Energy Performance Certificate records, used to calculate the average size of houses in an area. The data also considers the average asking prices of 1.2m property listings of homes in England and Wales.

This has given a national average asking price per square metre of £2,954 - only a tiny fraction up on a year earlier but 19 per cent above the 2015 figure.

Unsurprisingly the five most expensive locations on a price per square metre basis are in London. The W postcode designation in the west of the capital reports £10,427 per square metre.

Meanwhile the cheapest place per square metre is the SR postcode in Sunderland (£1,417 psm) closely followed by Teesside (£1,444), Blackburn (£1,490), Durham (£1,504) and Blackpool (£1,541).

In a rare diversification away from just listings, Rightmove is also launching a new House Extension Cost Calculator - but it admits that it’s “a very rough guide only.”

It uses the same ‘asking price per square metre’ data to estimate how much extensions could add to the value of a house, along with estimated labour costs, in 103 postcodes across England and Wales. 

The calculator includes potential values for small extensions measuring up to 15 square metres, medium extensions up to 25 square metres, and larger extensions up to 35 square metres. 

In a big health warning about the tool, a statement from the portal says: “The Rightmove data team who created the calculator advise that the final costs and potential value will depend on a number of factors including the finish of a renovation and materials chosen, the use made of the space and if the house has already hit an affordability ceiling for potential buyers in the area, and so should be taken as a very rough guide only.”

Tim Bannister, director of Data Services at Rightmove, says the calculator has come about because the portal is apparently “often asked how much an extension might add to the value of a home.”

He adds in further caveats: “Homeowners need to think about why they are doing an extension. If it’s to add value to a home then it’s worth bearing in mind that local markets all differ, as does the price that people will be able to pay for a property, so there will be times where adding an extension will not increase the home’s value by more than its cost. But for many people the reason is so that they can have more space at that moment in time, and so adding some value for when they do go on to sell in the future could be a bonus for them. The final cost will depend on the materials that homeowners might need to buy as well as any extras such as planning permission.”