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The Value of Design:

How Good Design Translates Into A Significant Price Premium

This article first appeared in Prime Resi.

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A well-designed home in London attracts a 12% price premium per square foot over a more run-of-the-mill residence, according to some new research by specialist estate agency The Modern House and Dataloft. And form plays a greater role in the prime arena; the average design premium for a London property over £1m is a punchy 19%, while good-looking homes under seven figures command an average PSF price 10% above a prosaic comparable.

“Design is a real differentiator for today’s home buyers and they are prepared to dig deep if they can see design having a tangible effect on their lifestyle,” says Albert Hill, co-founder of The Modern House. “More than ever people are looking for transformative experiences and so the enthusiasm for investing in a great home space is not surprising.”

Of course judging what makes architecture and design “good” is pretty subjective. Which is where The Modern House boasts a particular skill-set; founders Albert Hill and Matt Gibberd were highly-respected design journalists before moving into property proper (Gibberd was Senior Editor at The World of Interiors; Hill was Design Editor at Wallpaper*). They recently sealed their maestro credentials by penning a “visual manifesto” in celebration of Modernist architecture, which was published by Phaidon last year.

 

Applying some journalistic rigour to an anecdotal trend, Hill and Gibberd brought in property research house Dataloft to quantify the value of design in London’s property market – comparing the underlying per square foot sale values of homes with “high design values” against the mainstream market, and identifying any monetary difference between the two.

Over 14,000 residential property sales were looked at across the capital, with 212 identified as having the right design stuff. All these deals took place between 2014 and 2017, and were benchmarked by Dataloft by year of sale and postcode sector. The results indicate that there is indeed a price premium associated with high design values, and that premium has been relatively consistent over the past few years – despite a pretty turbulent London market.

Higher value markets tend to have a higher percentage premium (averaging out at 19% for the £1m+ transactions looked at, compared to £10% for the sub-£1m deals) – but there’s a limit. There isn’t really a mainstream market to benchmark super-prime (£10m+) homes, so little evidence for a design-related premium…

It’s worth noting that, as ever, there are multiple other factors at play here. One that The Modern House is keen to flag is that design-focused homes tend to have more compelling marketing materials; specialist architectural photographers are more adept at capturing a property’s character and highlights than generalist snappers, while Modern House particulars tend to go into more depth on provenance than might be expected for a “normal” home.


To help us layfolk identify elements of “good design”, The Modern House’s Hill and Gibberd have compiled a check-list that may prove handy for anyone looking to create a more beautiful residence (and take advantage of that design premium). Key things to consider when designing a home are:

  • The use of a carefully chosen palette of materials throughout
  • A focus on natural light
  • A good flow of internal space
  • A considered relationship between internal and external spaces
  • Visually engaging forms both in internal and external design
  • A sense of spatial drama perhaps through high ceilings
  • A well curated range of fixtures and fittings