RedMarauder, yes of course it is a generalisation. I did say that I was referring to new build properties in larger estates. This is where the majority in terms of numbers are to be found.
MOST new builds are on larger estates. These tend not to be located in the centre of towns but on the edge. By nature, they aren't near the key amenities, although often the larger ones have a a school or GP surgery built too, even if only after a few years. As I mentioned there are smaller developments and yes, some are very central. As with all houses you are paying very much for location. More central locations close to amenities and transport tend to command a higher price.
And yes, the premium for a new build is for that kind of house compared to one of a similar style which is a few years old. It isn't a premium in comparison to a period property.
When looking at new builds and considering their true medium term worth, look at similar properties that are around 8-10 years old. Make sure you compare a similarity location and not just house. You can see then if there is a really significant premium for the newbuild or not.
One big factor which has inflated their prices is the fact they are the only properties available for most who need help to buy or shared ownership. The irony is that those who cannot afford to buy via a full mortgage on their own, are pushed towards the more expensive option of the new build. But that's often the way with taking what is essentially a further credit agreement and seen in terms of taking on PCP/lease cars etc too....people often can afford the monthly payments (higher than if not in such a scheme) but couldn't afford to buy outright.
As a PP said, it is a matter of taste. Some people like older properties and some like new. Lots cannot imagine what others see I the alternative property. Those who love new build sometimes hate the idea of maintenance or potential unknown future costs. Often they love the many bathrooms and the modern lifestyle layouts. They will put up with the small gardens which are often overlooked for this, along with the fact there is usually an allocated amount of parking with the property, which is highly valued by lots of people. Often people think just in terms of the home itself and the inside and not so much about the surrounding area.
Others dislike the idea of being on an estate or the small gardens or being overlooked or the congestion issues which can arise from narrow streets and people parking outside their designated spots. They do t want to get in their cars for everything, but prefer a standard street. They put up with sometimes poor parking as a result and accept maintenance as standard. Everyone makes compromises when they buy a house.
New builds do differ. There are small developments and there are real luxury houses with huge gardens which can be very central. However, the vast majority of new builds by volume sold are properties on larger estates and do have smaller gardens and are less centrally based.
Speaking in very general terms again, you'll find different subsets of society buying new builds and older properties. Look at the marketing for new builds and think about who they are targeting. Where you're talking about smaller family houses, the builder is usually targeting families with financial incentives who might not otherwise be able to afford the 3 or 4 bed house. A scheme which gives help to buy or shared ownership or takes an existing property off people's homes suits those who are less confident in house buying and negotiating, have less financial security behind them already than some people, and who might be willing to focus a lot on monthly affordability rather than long term cost of the buying method. That's why many of the people buying these properties also have cars on PCP or lease. It is targeting people with a certain approach and attitude to finance....people who would like to have the bigger or newer item, but can't afford it outright, but are willing to pay more over time in order to get it.
Notice, I did say I'm generalising. Clearly there se people who buy new builds as cash buyers and those downsizing who aren't interested in financial incentives and packages. However, these days, over 80% of new cars are sold as lease/PCP and on the bigger estates, very large numbers of properties are sold via financial help to buy schemes in some form or other.
Lots of people could afford to buy something different without one of those schemes. They might be able to buy an older property with 1 less bedroom and get the full mortgage. However, for lots of people there is real appeal in the shiny new that no-one else has lived in, plus bigger is often appealing, even if it's not currently affordable unless a scheme is used which will cost more over time.
It's the way to up sell these days with lots of things. Tell people they need or deserve bigger and newer and that there is a way for them to have it now, rather than waiting until they have saved to afford it by conventional routes. These methods used by new housebuilders and car salesmen have breathed huge life into housebuilding and the new car industry. It is all an extension of credit and allowing people to access what they cannot afford by conventional routes.
Other people aren't interested in this stuff. They are happy to borrow with a conventional mortgage and they accept they might get a bedroom or bathroom less by that route, or they might have to save for another couple of years before they buy or before they move. Or they accept it will be a 15 year old house with a slightly dated bathroom rather than the brand new with help to buy, or the Victorian terrace with a poky kitchen. Different things work for different people.