When is it useful?
When evaluating different properties, understanding their price per square foot is a useful starting point. It gives a quick snapshot and can hint if something is wildly under or overvalued. Unfortunately, the latter is far more common!
Secondly, it outlines how different property types perform in the same area. For instance, the price per sq ft of a detached house in St John’s Wood is likely to be at least 50% more than a 1 bed flat across the street.
Is it accurate?
Don’t assume a selling agent’s calculation would be the same as yours.
Floor plans are not created equally. Some include restricted head height areas, vaults, garden studios etc. – some don’t. Try to strip out these discrepancies from the data before comparing properties.
Finally, don’t assume floor plans are completely accurate or representative of total living space. For instance Gross Internal Area calculations are allowed to include areas occupied by internal walls.
What are its limitations?
Price per sq ft is a useful starting point but price is determined as much by intangibles as hard data.
There are far too many factors to cover in this article but anything from garden size, quality of workmanship, natural light, mature trees, orientation, the wider street, the seller’s situation, ownership type (freehold or leasehold), the reasonableness of service charges all inform the price.
A buying agent’s view
When we discuss offer levels with clients, price per square foot is part of the conversation but never the main focus. If a property’s asking price is significantly above or below the street average then you need to understand why.
Buyers looking for best-in-class property should also be mindful that scarcity value will drive up the £ per sq ft. The question is always how much of a premium is fair to pay.
Remember, flow and genuinely usable space are just as important as size alone. A classic example is many Victorian terraces have an awkward dead space between the front living room and the rear kitchen area. Further space is taken up by stairs and corridors. In contrast, a lateral flat in a mansion block may be 10% smaller but will feel like a more spacious place to live in.
There is a reason surveyors use price per square foot in their methodology and more London buyers should pay attention to is – as long as they understand its limits.