Calculating fair price for house

[IPartridge]

I know that a house is worth what someone is prepared to pay for it, but humour me. Please give me your opinions on this scenario -

5 year old 3 bed house for sale. It is part of a very small development of about 5-10 houses in amongst a much older estate (1960/70s). This is the first of the new ones to go back on the market.

There have been some 3 bed older properties around it that have sold recently. These are a bit larger and on larger plots, but obviously less energy efficient and have older kitchens/bathrooms etc.

Would you expect the asking price of the newer one to be more/less or same as the older ones? And if more or less, by how much?

Hard to know without seeing the properties but larger house with a larger plot would normally command a higher price. Where I am, there have been a few new builds in streets of Victorian terraces that are smaller and around 20% cheaper.

People value different things. Personally I would prioritise size of both house and plot over newer kitchens and bathrooms, and probably energy efficiency too, though I would expect the price of the older properties to reflect the need for double glazing, for example. However, aesthetics also matter — but they’re subjective, so it’s still a case of ‘it depends’.

Less than the older ones. Can't really put a % on it though.

Ime new builds generally have small gardens prone to flooding, smaller bedrooms, awful 'modern' open plan layouts. Plus there's everything you read about being wary of newbuilds due to potential problems, cheap materials etc.

Whilst I would love a more energy-efficient home, I'd take it as a bonus and wouldn't think I'd pay more. I'd pay more for size and plot. Chances are I'd refurbish/redecorate anyway, so the old kitchen wouldn't bother me greatly.

The older ones aren't massively bigger, but are of an age when driveways and gardens were more generous.

The house in question has an asking price of £460k vs £400k of an older, recently sold house.

I would say the older houses with a more generous size plot would be be worth more money.

When we were house hunting recently, we found that almost new houses were often unrealistically priced. They're very expensive to buy new, and it's difficult for sellers to accept that the value will decrease for a while before it increases again. Can you find out what the house sold for 5 years ago? It's difficult to know if it's correctly priced in relation to the older house as new/old homes attract different buyers and the price of the older one may have been renegotiated after a survey.

The 5 year old house was bought for £390k.

There's a lot of interest in the house so I think it's unlikely to sell for much, if any, lower than asking

I'd definitely pay more for an older house with a bigger plot, especially if the rooms were bigger. The bedrooms in new houses are usually too small for us, and we value a bigger garden.

I live on an 8yo new build estate that is built on the side of a 1960s estate.

A steady supply of the 'scond hand new' (ie 8yo) houses go on the market and a good 90% in the last year have not sold. The area is very desirable. I think that the reason they don't sell is because they are overpriced - home owners have an inflated sense of their value.

New houses lose value in the first few years. With a new house you pay for someone not fucking it up with their own DIY and as soon as someone moves in, it’s no longer shiny and new and loses value.

As you’ve pointed out older plots usually have bigger plots, garages and driveways on the plot (as opposed to allocated spaces) and bigger gardens. Sometimes the layouts of the older plots are not fully aligned with how we live now, that’s costly to fix. There is also the issue of older bathrooms and kitchens, which are expensive and inconvenient to renovate. With older building you also have to consider the const of a full potential renovation - windows, boiler, electrics, roof.

New build estates can have more amenities though. They may have dedicated play spaces with new equipment, which might be helpful for families. They also tend to be on the outskirts of town as that is where the space usually is. So this might mean quicker access to main rods used for commuting or park and rides sites. It might also mean closer to accessing nature and may have countryside views. All of those would increase the price of the new build.

It doesn't really matter does it if there is lots of interest in the new house at the asking price - the value of a house is what someone is prepared to pay.

I think there's probably not much difference between the old & new. Yes, some people would be prepared to pay more for the older properties but imagine lots would be prepared to pay more for the more modern properties. Quite alot of people want new builds but don't like the idea of a big estate - a small development of a few houses is probably ideal for these house hunters? I also think that perhaps people don't have the disposable cash (or desire) to change the decor / upgrade the spec, and new builds often have a layout that is more conducive to family life (kitchen diner / perhaps ensuite etc). Also with the cost of living, people are looking to minimise monthly costs - and new builds are often cheaper to heat / maintain.

We didn’t even look at new builds when we were buying a few years ago.

With a £460k budget I’d rather buy the £400k and spend £60k (or less) on renovation.

I do sometimes get a prang when I visit new builds - everything works, they generally look fresh and modern. My (forever) house needs intensive decorating but we have small DC so it has to wait.

But we’ve x4 double beds, a full drive, decent size garden with outhouse x2 rooms and kitchen diner downstairs in z6 - the new builds cannot compare for size.

460k sounds steep assuming that the older house has a bigger square footage or bigger garden, or both.

If you want to offer on it & think it’s better than the older house that recently sold, I would start negotiations at 400k. If the EA has received better offers from proceedable buyers they will tell you, though they shouldn’t disclose the exact price someone else has offered.

New houses lose value in the first few years. With a new house you pay for someone not fucking it up with their own DIY and as soon as someone moves in, it’s no longer shiny and new and loses value.

That depends entirely on the market. I've bought two new houses and sold them within 5 years for more than I paid. Often buyers add things that increase new build's value e.g. new build gardens are a bit crap and can be made to look better quickly.

The new houses in our town were snapped up ten years ago by young couples. Nobody was interested in the 1960s estate next door. Now the young couples all have growing families and want more space, rooms, garden and parking so the 1960s houses are selling faster than the 2010 houses.

Personally, in todays market - and I am buying at the moment, I didn’t look at houses (after learning that newly listed sellers have been told a bunch of fibs about how much their house is worth by their agents) when they first come into the market, as they are invariably over priced. (Obviously there are exceptions to this, but rare) .
Wait until they are reduced on rightmove, and then generally offer 10% below. The market is very different now than 18-24 months ago.

You could also try using a house price calculator @IPartridge such as the Nationwide one. You can put your postcode in and it will tell you what has happened to prices generally in that postcode over the last 5 years (or whatever timescale you put in).

It doesn’t take into account the condition of the property or whether it’s particularly desirable or not compared to average so it’s only a rough guide.

I know someone who is buying a 5 year old immaculate house that was bought for 390 when new. He is paying 420. I thought it was too much as there are slightly older (20 years) houses going for around 400. The older ones are nearer to town/station too.
He did indeed value the immaculate bathrooms and kitchen.
The vendors had to market it for 7 months and reduce from 450 until they got his offer.
It's only an anecdote but there are occasional buyers who will pay more for a more modern finish and not prioritise slightly more space or a better location. He did have everyone telling him to buy a 400 older one and just decorate.

The problem with that strategy is that the best properties may never get reduced as tend to sell quickly even in a stagnant market.

But if you are someone who prioritises getting a good deal and doesn’t get emotionally invested in your potential next home, then I can see it could be a good strategy from a financial point of view.

Good point & I agree people prioritise different things and while I personally prefer older houses, some people prefer new build or modern houses as we’re all different 🤷🏼‍♀️

It depends on so many things. Size and garden is important, but layout of each is too. One 60s house might be have wiring, plumbing, insulation and bathrooms done but another doesn't. 60s house might have nice big windows, new one could have a bigger eat-in kitchen.

Move in ready properties do seem to be attracting a premium recently though possibly because of high renovation costs and trades being scare.

I have been trying to buy a house for over 18 months and the market has changed in that time, although I am still seeing decent houses selling over a weekend with multiple interested parties and I suspect that is going to happen with this one.

The ones that are hanging around are either over-priced (and it seems the owners aren't bothered as they're not reducing), in really bad condition or they are in unattractive (to me) locations e.g. dark, north facing or back onto a main road.