To ask what will happen to new build prices?

[ladymary86]

Before lockdown we had our eye on a particular house and plot with a builder near by.
The plot hadn't been released yet but we were willing to wait it out.
There has obviously been lots of chat about a recession and house prices being hit but I feel like builders setting prices for their houses is a bit different from someone selling on the home they already live in.

Will builders have to drop their prices or will they be able to keep them up if no one wants to sell their home while the market is depressed?
Will there be fewer buyers because of personal circumstances?
Houses and prices were not something I was aware of back at the time of the credit crunch so I don't even have that to compare. Did prices drop then?

Any insights?

No one knows I'm afraid

Part of my question is about what happened previously? Surely someone must remember something about then?

The 2008 recession didn’t cause house prices to fall - it was the other way round - the fall in house prices caused the 2008 recession. In fact in the majority of previous recessions there haven’t been significant falls in house prices. In previous pandemics the number of house sales has decreased as people avoid human contact but prices haven’t fallen much, the market has just stagnated. So I wouldn’t expect massive reductions. Actually I think demand for homes with gardens and extra space for a home office has gone up, while supply has reduced because people who already have plenty of space are staying put. Imo prices will go up rather than down - the only prices that will drop are undesirable properties with no outdoor space. Nobody wants to be locked down in a flat with no garden.

If you require a mortgage and the valuations keep coming back lower than the price they are asking they may have no choice but to drop slightly. I wouldn’t imagine it would be by a great deal though, and if someone came along that doesn’t need a mortgage and are prepared to pay the asking price you would lose out. I deal with new builds and it sometimes takes upwards of 10 valuations with various lenders before they will consider it.

Thank you - that's all really helpful!

I have to say all the houses near have all sold in the last couple of weeks after being on sale for about 3 months

I work for a property developer and certainly at the moment we aren’t having any problems selling at the price the properties are being marketed at.

Well there are new builds that I know of in an area of north east Scotland that have some plots with approx 20% reductions at the moment. Not sure if related to current situation but pretty attractive prices none the less. Some other developments with smaller reductions. No clue on other areas though.

Interesting perspectives. We have just withdrawn an offer on a large new build property. Our feeling was that new builds may well be particularly prone to price fluctuation in the next few years. Also, it was an executive new build with the big draw being it was near a mainline station to London. For just shy of a million quid, other features such as the off the peg kitchen were disappointing. We are unlikely to need to commute to London daily ever again, so the main appeal has gone. We've now found a gorgeous Victorian house, 6 miles from the station, 200k cheaper. We are so much happier with this choice now. I do wonder if others too will be reluctant to pay the new build premium?

Spangly - I'm in Scotland (not the north east though) but that is interesting!