A new study by the London School of Economics has revealed that constructing new properties does not force house prices down.

The research, which examined the price impacts of a range of Barratt Homes projects in suburbs and villages throughout the last five years, found no evidence of price deprecation for the properties considered.

Instead, the opposite was true in several cases. The report states: “Developments of the size and scale studied, even in areas where originally objections were significant, can lead to more rapid rises in local house prices.”

In total, eight developments comprised of 300 new homes were looked at, all based in the Midlands and South England.

Good news for construction and property markets

These results are in stark contrast to the prevailing view of many economists – that more houses are required in order to limit the prices of future properties. This is excellent news for the both the construction industry and the property market alike, and should invigorate further building developments. Although construction fell short of targets in 2013, with just 141,000 new homes being built, the consensus holds that between 200,000 and 300,000 new properties are required each year. This latest research will give interested parties the confidence to reach the larger target.