Bricks and mortar account for only 59 percent of a property's market value

  • The average sale value of a house is £114,000 more than its rebuild cost
  • Factors such as local amenities, schools and public transport account for over two-fifths of a property’s value
  • London, Brighton and Bristol have the highest ‘location premiums’ in the UK
  • Average adult overestimates the rebuild cost of a home by 38 per cent

New analysis1 from Direct Line SELECT Premier Insurance reveals the huge gulf between the cost of building a house and its market value. With two fifths (41 per cent) of a property’s value (approx. £114,000) derived from factors such as; the quality of local amenities, transport links and schools, as well as demand for homes in the area.

Analysis of property prices for three-bedroom homes across twelve major UK cities reveal that the average house price of £277,608 is 59 per cent higher than the projected rebuild cost of a similar property, which is valued at £164,000.

The cliché of “location, location, location” appears most apt in the capital, where homeowners typically spend an average of over £647,000 for a three-bedroom property, more than three times the average rebuild cost of £205,000. The property premium (£442,571) is in fact so vast, it is higher than the average market value of homes across the UK2.

After London, Brighton has the second highest location premium, with residents on the south coast paying more than double the estimated rebuild cost to purchase a property in the city. This is followed by Bristol, Edinburgh and Norwich, all of which have location premiums of 60 per cent or higher.

Table one: Average market values and rebuild costs of three-bed properties in 12 major UK cities



Average cost of a three-bed house

Estimated rebuild cost of a three-bed house







South East





South West










East of England










East Midlands





West Midlands





Yorkshire and The Humber





Northern Ireland





North West





North East





United Kingdom





Source: Direct Line SELECT Premier Insurance 2018

Further research2 conducted by SELECT reveals the public have little to no idea of the amount it would cost of rebuild their property, with British adults estimating it would cost an average of £226,750 to rebuild a three-bedroom house, 38 per cent more than the actual cost. As a result homeowners could be using an inaccurate figure when buying home insurance and therefore increasing the cost of their building insurance unnecessarily. 

Nick Brabham, Head of SELECT Premier Insurance, commented:“Although people may be surprised by the amount of value placed on a property’s qualities beyond bricks and mortar, this analysis shows just how much intangible benefits such as; local amenities, location and transport links add to the price of a property.

“Wherever you live in the country and whatever the property premium on your home, it is vital that you value the rebuild cost of your property accurately. This will help ensure you are suitably covered especially if your property has bespoke features, if it’s listed or made of non-standard construction materials. For many, the impact of under-insurance is only realised when it’s too late, but this is preventable.”

- ENDS -

Notes to Editors

  • 1Direct Line SELECT Premier Insurance analysis of average house prices for three-bedroom properties in 12 major cities across the UK, as listed on in September 2018. Average rebuild costs of three-bed properties in 12 major cities estimated based on RICS data.
  • 2
  • 3Research conducted by Opinium among 2,009 UK adults between 17th and 20th August 2018.


For further information please contact:

Claire Jarrett 
PR Manager  
Direct Line Group
Tel: 01651 832 411
Email: [email protected]

Nick Andrews
Citigate Dewe Rogerson
[email protected]
0207 282 1050

About SELECT Premier Insurance

Direct Line offers SELECT Premier Insurance to cover homes, cars and valuables of high worth, as well as breakdown cover, pet and travel insurance, all covered under just one policy. When taking out SELECT Premier Insurance, Direct Line will even pay your cancellation charges from your previous policy, making it even easier and affordable to have all your policies under one roof, with one payment plan and one renewal date.

At SELECT Premier Insurance we help you stay in control by offering you a truly personal service. To begin with, one of our accredited insurance advisors will carry out a complimentary individual telephone review with you. Then they’ll give you tailored advice, based on your unique needs, for example, specialist cover for valuables such as fine art and jewellery (without needing to list individual items worth less than £10,000) or for your property portfolio, to ensure you get exactly the right level of cover.

To find out more about what Direct Line SELECT Premier can offer, go to or go straight through to an expert, not a machine, on 0800 206 2849

Direct Line

Started in 1985, Direct Line became the first UK insurance company to use the telephone as its main channel of communication. It provides motor, home, travel and pet insurance cover direct to customers by phone or on-line.

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