Daily Mail: New build house prices boomed 17% last year while older homes dipped

[KievLoverTwo]

I'm glad someone is finally covering this. When I did a bit of independent research on a few areas and downloaded land registry data for new builds versus non new builds, the difference between the two (and sizeable falls in costs of new build sales over the last two years) was quite amazing. It definitely skews the reliability of 'house prices in Boroughbridge rose 6% in the last year' type of thing you see on places like Rightmove. I've given you an example area that's chocced full of new builds - in fact, Rightmove is saying the opposite! Now what's happening is dozens of them are trying to sell their secondhand newbuilds and hardly anyone's buying them, which is quite sad really. It's an okayish area.

I'm not looking for a bun fight (done enough fighting elsewhere this week, teehee), just to share the article, on which you can make up your own minds :)

https://www.thisismoney.co.uk/money/mortgageshome/article-13271345/New-build-house-prices-boomed-17-year-older-homes-stayed-flat-map-shows-price-gap-area.html

Idk what it was like when SO was first brought to market, but I've had 'discussions' on here about the pointlessness of it all.

Say, your mortgage is 800 and your rent 700. So you save £100. The number just don't seem to make sense to me anymore.

I've had my pick of probably 100+ lenders who will do 95% LTV, so I'm not convinced this is as big a problem as people think it is.

Unless I'm missing something?

Indeed. I went for 300 years old, and not even a single viewing in three months...

I bought a new build recently.

Comparably sized older properties were either the same price and needing work, or recently renovated & more expensive.

Could possibly have negotiated down, but the new build buying process was extremely easy so why would I make life harder for myself?

300 years old people will worry is "too old" whereas brand new is "too new."

Not on topic but if you haven't had a single viewing in 3 months it appears you need to lower the price significantly?

Yes, we did drop the price already, we can't drop it again though as that would put the house we want out of reach, so we'll probably just take it off the market. It was a catchment area issue but DS will just have to go to the comp then 😁

Yes if we bought now we would have had no issue. But we bought in 2020 when 5% wasn't an option at the time. Glad we did; our interest rate is amazing compared to what it will probably be when our fix ends.
Plus we were able to get carpets, flooring, turf, integrated appliances and other upgrades at no charge so it was ready to move into with minimal effort.
We would consider older properties when we come to remortgage but have to factor in the cost of doing one up so wouldn't rule out newbuild again.
Second hand newbuilds on this estate are selling quickly and for much more than I think they should really.
But my point really was that despite the newbuild hatred, it sometimes is due to no choice/can work out better financially and is a better option than paying rent.

Ah ok. The figures have got to make sense of course or no point in selling. Hope you get more interest in your property soon although if not, it sounds like you are happy enough to stay put apart from the catchment area issue.

I've noticed this happening here too. The new builds in my area are generally very poor value per square metre, and have a lot of tiny rooms crammed in a small space - the 4 beds are only 110sqm, and that includes 3 bathrooms. Older 4 beds are 50% more space, and cheaper. Likewise the 3 beds have very small rooms and are less than 90sqm.

People might be willing to overlook this in exchange for everything being new, especially when developers give incentives, but when they've not got that ISP of being completely brand new they aren't a great prospect.

Your personal experience.

Our development has many larger houses bought by established family's or (like us), retirees who are buying their last home but want lots of space.
There are some smaller (starter) homes of course and some 3-4 bed intermediate houses for people moving up the ladder.
A real cross section of the house buying public in fact.

Regarding newbuild pricing premium, we have what must be a strange situation of when a house is sold (divorce, work relocation etc) they are priced (and selling) at 10-15% more than an identical brand-new house being built just 200yds down the road.
Yes they are snagged and probably have carpets, curtains, landscaped garden etc but with a choice of the two, I would rather have the brand new one to put my own stamp on it.

They are really starting to struggle to sell the new build developments in our area. Even with incentives.
Two to three years ago they were going like hot cakes. It's the huge change in cost of borrowing that now looks like being a longer term trend than expected.

Also I should have said that the cladding scandal also put people off buying new built flats in cities.

People often struggle to sell those back as well if they don't have the right paperwork/remedial work to prove to lenders that there are no cladding issues.

Also the leasehold reform has been watered down and is pretty much useless so people will still be concerned about the cost of renewing leases, service charges and ground rents.

I also think it depends on the developer as well regarding how popular new builds are. The estates can vary a lot in quality. Ones with green space, plenty of parking, good quality fixtures and fittings are still going like hot cakes. Others are struggling to sell.

Most of the estates I see have cars parked on the pavements. It should be a requirement of 2 parking spaces per house, especially as the people who live on them will depend on their car to get about.

New build prices are not exactly apples for apples though. Pre-pandemic I remember flats being completed and them hoisting signs like 'almost all sold' 'just 3 remaining' left.

Looking at the ones that are completing now/recently you can just tell there is a real struggle to sell them. The price is roughly the same, but a lot seem to come with whopping incentives not seen before, ie mortgage paid for 2 years, deposit contributions, I suspect if you were a willing buyer at the full market price the developer would throw loads of incentives at you.

Of course only the full market value is reported for the figures, the amount of incentives isn't. And then people try and resell in a few years without any of the incentives and bemoan the new build hasn't improved in value. In some ways it has, it is just that the original price was opaque.

I dunno if the papers like reporting this though, I suspect the developers have some powerful vested interests. Almost all stories about new builds are positive.

I think that’s a really good point that developers will offer loads of incentives rather than reduce the price in a difficult market, which feels ok to the buyer but clouds the real picture re their actual value.

Trouble is, however much carparking you give people they will still park on the road.☹️

Our development is very good when it comes to parking, everyone has a driveway with space for 2-3+ cars plus a (good sized) garage yet STILL they insist on parking one car on the road.😖
Then again, this is not confined to new builds. Our old house (and our neighbours) had a huge double width driveways (parking for 7-cars) but still they would park on the road. Can't understand it.

Car parking in estates is a moot point - if the infrastructure in the surrounding towns and villages doesn't support active travel and good public transport, then of course people are going to buy multiple cars per household and park them wherever they can. Plenty of new builds in Cambridge come with no or at most one parking spaces and are generally ok - but that's because the default mode of transport is to use your pushbike.

Sticking a few more parking spaces (or taking them away) in a single development isn't going to change anyone's behaviour.

Car parking in estates is a moot point - if the infrastructure in the surrounding towns and villages doesn't support active travel and good public transport, then of course people are going to buy multiple cars per household and park them wherever they can. Plenty of new builds in Cambridge come with no or at most one parking spaces and are generally ok - but that's because the default mode of transport is to use your pushbike.

Sticking a few more parking spaces (or taking them away) in a single development isn't going to change anyone's behaviour.

Car parking in estates is a moot point - if the infrastructure in the surrounding towns and villages doesn't support active travel and good public transport, then of course people are going to buy multiple cars per household and park them wherever they can. Plenty of new builds in Cambridge come with no or at most one parking spaces and are generally ok - but that's because the default mode of transport is to use your pushbike.

Sticking a few more parking spaces (or taking them away) in a single development isn't going to change anyone's behaviour.

There was a two part Panorama (iirc) documentary on house building and energy efficiency in the UK.

The shareholders and people funding building don't care about this year's, next years or even the year after's profits, they only care about the long term value of the new builds. In a market where house prices are falling, they would rather get planning permission, build footings, and not build anything for years and years, rather than tell their shareholders they've had to sell the house for less money.

That's why they are currently chucking incentives around left right and centre; it keeps the profits somewhat rolling over, but doesn't reduce the asking price of the housing stock. After all, they've got NO interest in house prices in their intended areas falling.

These are seriously rich people and organisation to whom their business won't make or break off the back of one year's sales.

I've even heard stories of them offering free Teslas rather than reducing the asking price.

Perfectly valid point. I am sure there are a few thousand middle managers who justify their jobs soley based on what they are going to lend and to whom, on any given day, and they get paid just to move lending around.

I see it every single week in my inbox. For example: Nationwide reduces rates on 95% LTV by 0.3% and increases them on 75% buy to let properties by 0.5%.

I think it’s been the case for quite a while (I’m talking over a decade) that new builds have an inflated cost and I’ve certainly known people not make back their purchase price when selling a few years later. But seems like this new build premium is increasing exponentially.

This must depend where you are. I've looked at loads of new developments in the NW and NE and they were clearly heavily marketed at FTBs. Lots of modest starter homes with loads of deals aimed at people with tiny deposits etc. I know a few people socially in the NE and East Mids who have recently bought new builds and most of them were FTBs.

I think they're also very popular with retirees who don't want the physicality of home maintenance anymore.