Do new builds lose value?

[pomadas87]

We are considering looking for a new build property - we could get a lovely looking 3 bed house with garden for the same price as our period 1-bed flat it seems!
However, DH seems to think we want one that has already had one owner, and not be the property's very first owners as new builds decrease in value initially. Is this true? We would probably be there about 5 years.

Snagging is just things you notice that haven't been done to a high enough standard or aren't working.

You go through a walkthrough before you move in to check for snags and then have a certain amount of time after you move in to report any issues.

Most of ours were minor things and got fixed fairly quickly, although we did notice on the day we moved in a large scratch on one of the radiators, which has now gone slightly rusty, and they refused to fix it as we couldn't prove we didn't do it when we moved in

I think it's common/ almost expected for cracks to appear as the new build settles.

I personally wouldn't buy a new build because in my area you pay a large premium and if sold 2 or 3 years later are often less or the same as the original price whereas other properties will have seen a rise.

I did buy newbuild and it was beautiful. I was so proud of it. I had a stressful job and was away a lot on business so not having to do any maintenance was a real plus. I also had a lodger and the fact that the place was new and clean made it easy to rent to him and it didn't need much work for me to be able to rent it out after I moved on.

It initially lost value. I was worried. But I kept it ten years and it was on a par with similar properties by the time I sold it so no real loss.

I missed out on a new build a couple of years ago three coach houses were built in the grounds of a mansion. It was a conservation area and the houses were beautiful and finished to a high standard. Six months later one was sold at a 25% profit.

I live in a town with huge regeneration. The 5yo properties are really starting to show signs of wear and have dropped value significantly. Most people looking to buy want very old or very new. There isn't a market for nearly new.

It really does depend on area. We bought just over 4 years ago, we managed to get a good deal with a chunk knocked off the asking price as someone had reserved and then pulled out and they wanted a quick sale. We've just sold and made £20k. Admittedly, if we'd paid what the original asking price was we wouldn't have made as much. We're buying a new build again, we're intending to live there for a long time so haven't been concerned about making money this time.

I think it's that new builds at various stages underperform the market - that doesn't necessarily mean that they are worth less than you paid for them but less than if you'd spent the same money on something else. If you pay £200k for a new build and I pay £200k for an older property, after 2-3 years, you might get £210K but I might get £220k so you haven't lost money but have underperformed in the market.

You need to balance that you probably won't need to change anything in a new build when you move in ..... but if you sell at 1-4 years, your buyer is likely to want to. Also, it can be much harder to add value to new-builds.

It depends on the desirability and market but they often are sold at a bit of an inflated price. I dont think good things are about to happen to the housing markethis year . You might be better hanging on 12 months before buying.

Mine has gone up in value but that is because it is a very small estate (12 houses) in the centre of a desirable village that hasn't had any new houses in years. There's about to be a lot of new building happening soon though and I expect that might depress house prices a bit.

I bought my new build for £198k and sold it for £310k. I lived there 8 years.

You do pay a premium but they don't necessarily lose value, you just probably don't make as much as you otherwise would. But you also don't need to do any work and generally get your pick of kitchen/bathroom etc.

We bought a new build 4 years ago, it's gone up about £45k in that time (south east so not massive but certainly not decreased).

We tried to buy a second hand newbuild, it'd dropped by 80k in 5years. It was a lovely house, I kind of felt sorry for the owners. We lost out on it over £500, hmm sometimes when the estate agent tells you someone else has offered slightly more they're telling the truth !

The thing is, new builds are part of the wider market - they're not entirely separate. Buy a new build in an area where prices are rising, and you probably won't lose out because those rises will cancel out any premium you pay. Buy one in an area where they are flatlining or sinking and you may find you pay a premium for the newness that isn't reflected in the short term valuation a few years later.

My new build has increased in price by £110,000 in 8 years.

I think it really depends on the area and what you buy to begin with. Our new build is still in progress. It was sold to us as a 3/4 bedroom 3 bathroom house, but we're putting in nicer fittings and fixtures than were originally specified in the build, including wood floors, some extra windows, a nicer ensuite and dressing room in the master, a fireplace, and a nice kitchen. The big value adder though is that the whole loft area was undone when we bought it but ready to be converted (i.e. proper stairs in place and ceiling height already sorted). So we're immediately adding value by just paying an extra 20k to have the builders finish off the conversion right away whilst the rest of the house is being finished. It's going to be a 70sqm self-contained 2 bedroom flat when it's done. The extra value added with our upgrades and finishing off the loft have already made the house way more expensive than we'd be able to afford if we'd bought it finished.

Ack, posted before I finished my sentence up there!

...way more expensive than we'd be able to afford if we'd bought it as the finished 5/6 bed, 4 bath house we're ending up with.

It's one of 4 houses being built there though, so not an estate, and it's in prime real estate territory where house prices are skyrocketing. We're thankful we got something when we did.

It depends really. You are paying a premium
For a brand new house that no one has lived in before (because some really value that) and if, for example, the estate is still being built then in 3 years time no one will buy your house over a brand new one still
available

However new estates can also make an area very desirable. It’s a piece of string question tbh

We looked at both existing houses and new builds. In this area, the new builds were cheaper for same number of bedrooms. Floor space slightly less of course. We chose a plot with a big front and back garden, overlooking green space. It cost £32k less than the other house we were interested in (and made an offer on). We've spent about £22k having the garden landscaped and a conservatory built, bringing the floor space up to equal the other house. We're very happy with our decision and I like having the builders on call for issues and the NHBC protection.

Having seen a friends new build experience I would stay well clear. The 'snagging' list was massive, far more than snagging would imply including boilers failing after a year, flooding needing to be replaced and loads more. 2.5 years on still having tradespeople in to fix stuff.

In terms of snagging I would say there seem to be more problems with new build flats than houses.

I'm not sure if this applies to all areas, but in my area there has been a massive amount of stylish flats built that look beautiful, modern materials, colours etc yet lots have quite major design flaws. Every day I walk past a block that's about 5 years old. Lovely modern design, painted white, balconies with glass front and decking like material. Already the glass balconies have moss growing all over them, paint is peeling from the walls and you just know a balcony (which effectively is a flat roof) is going to be an expense and if its north facing on a major road will be rarely used. Another block near our last house had grey bricks and black mortar under the windows, white paint walls everywhere else, within a couple of years the mortar stained the white walls so they had grey lines running down them. There were also damp circles on the outside from bad overflow pipes dripping and/or uncleaned gutters so the walls had to be repainted with expensive scaffolding as it was 3 or 4 floors high.

So while I said earlier I would never buy a new build, I would absolutely not buy a flat - especially as 50% will be bought by landlords who don't notice their property deteriorating and won't be pushing the managing agent to do the maintenance work.

We bought a new build 2 years ago, I think its probably worth the same now as what we paid for it.

There was a fair bit of snagging. The main ones were the front door wasn't fitted properly so there was a gap (they replaced the door and frame), and the heating had been wired incorrectly to upstairs thermostat was controlling downstairs and vice/versa, and one of the roof tiles fell off! The rest was just decorating touch ups.

We got a good incentive offer from the builder (free upgrades / no stamp duty), and we used the Help to Buy scheme so we could afford to move in to a nicer home.

I love the home and have no regrets on choosing a new build. Yes the snagging is a pain but so would have renovating an old home been. I was 7 months pregnant when we moved so it was loved having not much to do and everything being so new. Financially and convenience wise it was the right thing for us. Hopefully it will go up in value eventually too.

We had a new build and were in there for a decade.

Pros:

• everything was new so nothing needed to be replaced. Any faults were picked up as part of snagging and sorted by the builder.
• it was very well insulated and energy efficient, so our heating bills were dirt cheap.
• we could move in, unpack over a weekend and go back to work on Monday. No decorating, no repairs - just put your stuff away and get on with your life.

Cons:

• We bought in 2006 at the top of the market. By 2009 it had lost 50% of its value and we were in substantial negative equity. That's not an issue as long as you don't need to move, but we'd not planned to be there for more than 2-3 years. In the end it took us over 10 years to wait for prices to recover enough to allow us to move.
• No storage space. Think about this VERY carefully. A lot of them are not very well planned and you need somewhere to stick your ironing board, hoover, odds and sods etc. We ended up having some major work done just to create a hall cupboard!
• Service charges and leasehold issues. We checked ours carefully and ours was one of the few that was OK, but watch this as lots of people are buying freehold and actually finding out that they are still responsible for communal estate areas - like playgrounds. What currently costs you a few hundred quid a year can be sold on with no warning to a private equity firm who will jack up the prices ££££. I know a few people who have properties that they cannot sell because of the associated service charges. In one case I have a friend whose house is almost worthless now because mortgage firms won't lend against it because of the terms of her lease.

Would I have a new build again? Yes. But I would pick VERY carefully.

As everyone has said, it depends.

But as a general rule of thumb, you will pay a new build premium. So in a static market, it would be worth less than you paid for it. Generally speaking, if the market is rising, older house will appreciate more than new houses.

However, in terms of desirability, 2nd hand new builds are less sought after because as a pp has said, people who like new build generally want brand new. And in the vast majority of cases, there'll be another brand new development down the road.

I have just recently heard of this happening, yes, by a lot.
(Not SE UK if that makes a difference.)

My dietstartsmonday- do you mind telling us the town as we are thinking of buying commuting to London , thanks