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

Yeah. In fact very few people want to hear prices have gone down.

The distorted way things are reported as well takes no account of volume.

OK I know its dangerous to use one area as representative of the whole country but I think the point remains. Like I said, a few years ago apartments were selling like literal hotcakes, no incentives needed, even crazy things happening like people camping outside the EA the night before release.

A major change was that at 0.25% interest rates, BTL was very 'profitable' for amateur landlords (I say profitable because buying the place is a 30 year commitment with historic booms and busts), but at 5.25% you aren't gonna get even experienced landlords interested at current prices.

To use an exaggerated scenario you could have 1,000 properties, 100% sold at average price of £400k a few years ago, no incentives needed.
This year you could have 1,000 properties too, but only 1% sold at average price of £420k with loads of incentives.
The rest that don't sell is a headache for the developer but they could sell big tranches of the flats to institutions at deep discounts (which don't appear in the figures) who then rent them out.

The news report: New build property prices have risen £20k in 3 years!

Most people are too thick to really delve any deeper, and only want to hear the good news.

Bit harsh! I like to think it's more head-in-sand syndrome than not being too clever.

This is really interesting. I used to think the opposite was true, in that the number of new builds is always increasing, but there is a finite supply of old houses. I suppose the article doesn't split them into period properties and new builds though, rather brand new and everything else is lumped together. Definitely not having any luck selling our period house at the moment!

Ah I took your first sentence literally.
But I assume it's area dependent because I'd say most of the newbuilds where I am (there are ALOT being built) are targeted heavily for first time buyers.
I can't say I'm not worried for when we do decide to sell, however, with a few alterations we could also stay here long term.
I love our house but having rented old properties previously... I do miss the high ceilings!. Don't miss the energy bills though lol.

Interesting - I’m in SE and new build estates almost always comprise a range of 2-5 bed homes, some small terraces but the majority semi or detached large family homes.

"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."

Yes I agree that the extra premium paid has increased substantially. The time taken for the house to be back up to its origional price, when sold again as a used, seems to be taking much longer too.

Recently I saw a 4 year old house for sale with 6 years guarantee left and it had a recently installed new kitchen!!

My 1996 kitchen is still going strong (although I appreciate distressed wood doors and green/cream tiles are no longer in fashion).

Keep it long enough and it's vintage!

My daughter has just had a new bathroom fitted with green and cream tiles, it's "vintage" apparently

Yes that's true.

What's really.vintage is the orang-ey formica kitchen that this house had fitted when it was first built in 1956 and which we moved to the back of the garage in 1996. That's also still going strong!

Lol - only a matter of time before it's back in fashion (if it isn't already)

The current CMA investigation into developers is a clear indication that a pricing cartel may exist. I'm not sure how long the investigation will take but :

The 8 housebuilders whose activities are being investigated are:

• Barratt Developments plc and its group companies
• Bellway plc and its group companies
• The Berkeley Group plc and its group companies
• Bloor Homes Limited and its group companies
• Persimmon plc and its group companies
• Redrow plc and its group companies
• Taylor Wimpey plc and its group companies
• Vistry Group plc and its group companies

I suspect price fixing/overpricing won't be the only anti competitive activity that gets uncovered. It's not impossible that new builds will become the next miss selling scandal. The wait for the results on this government investigation could be lengthy though. Particularly if we don't get a change of government. Several on that list make donations to our current leadership.
https://www.gov.uk/cma-cases/investigation-into-suspected-anti-competitive-conduct-by-housebuilders

Oops, didn't mean to reply to you @DrySherry, sorry

Kevin McLeod (Grand Designs chap/architect)

“In 2009, the average profit that the big housing developers made per unit, per house or per flat was about £6,800. Now, they make per unit 10 times that 68,000.

“They’ve shifted their focus from volume and meeting government targets to the profit they deliver to their shareholders.

“Persimmon, the year before last made £1.1 billion of profit for their shareholders, 25 per cent of their turnover."

https://www.joe.co.uk/news/kevin-mcclouds-advice-for-first-time-buyers-in-the-uk-is-move-to-germany-430817

He goes on to tell people to move to Germany O_O

“I look at the UK market and I see nothing good here,” he said. “I look at what’s happening in Germany, Holland, Netherlands, Denmark, Scandinavia, I look at other, almost every other North European country and Canada – they’ve got really healthy markets, lots of diverse opportunities, lots of diverse offers and it isn’t hugely expensive.

“So, yeah, my advice is move to Germany, maybe that’s the way forward!”

Shared ownership has made my friends alot of money! They did it about 8 years ago though so prices have gone up alot. They paid about 70k for a 40% share back then; the same amount wouldn't get them 25% of the same house now.
They all moved on to full homeownership with the profit as a decent deposit. Can't see that ever happening again. None of them staircased to full ownership as it wasn't worth it with all the extra costs.