Can new homes be overpriced?

bylromarha

If it's a comparable price to those around it, then no it isn't overpriced.

We bought our 3 bed new build house for £130k in June, old 2 beds down the road going for £120k. Next phase of estate now being sold and our house style selling for £155k. And you can guarentee people will buy it.

So do some research for the area and that will answer your question.

KentAde

Thanks to everybody for their replies. Now have a discussion forum to discuss with wifey!
Am now going down the route of the builders buying my property (hopefully at market rate). They have said that if I'm not happy with the amount offered, I can pull out. This will save EA fees of £3K, and they are also paying valuation and legal fees...so I reckon - if the valuation is reasonable - I could be saving around £5K, taking the new house, effectively, down to £225K.

Anyway, appreciate all the replies.

claireyfairy_2

I have not had teh time to read the whole of this thread, but just wanted to quickly say that we paid £17K less fro our new home than Barrat were marketing at, and others paid less than us. We got a conservatory, carpets but should have pushed for more such as firtted wardrobes. When we paid £240K and the rebuild price was £109K, you can see where builders make their money. We're just about to sell for less than we paid, not a very good move.
Good luck

plane_boy2000

I find some of the sweeping "all new builds are overpriced" threads on here quite funny. Lets take into account that the house is valued by a professional independant person to verify the price is correct. Yes builders are always going to ask top whack - wouldnt you? If your house is valued at 150K would you say thats a bit much - think I will ask 130 for it? Also consider that you are paying for a NEW house with new everything in it and a warranty for a couple of years - if you bought that old house down the road and then had to buy new carpets, heating, cooker etc etc then the difference can quickly be eroded.

Just for the record I bought a new build last year for £325K and its now worth about £360K so I dont think it was overpriced, and if fact taking teh incentives offered into account the house was cheaper than anything else I could have got in the are with the same square footage so its not all as black and white as some on here would have you believe!

RHemmings

plane_boy2000 wrote:

I find some of the sweeping "all new builds are overpriced" threads on here quite funny. Lets take into account that the house is valued by a professional independant person to verify the price is correct. Yes builders are always going to ask top whack - wouldnt you? If your house is valued at 150K would you say thats a bit much - think I will ask 130 for it? Also consider that you are paying for a NEW house with new everything in it and a warranty for a couple of years - if you bought that old house down the road and then had to buy new carpets, heating, cooker etc etc then the difference can quickly be eroded.

There has been a considerable amount of controversy over the valuation of newbuilds. Here are a few links on the subject.

http://www.cml.org.uk/cml/policy/issues/1223
http://money.guardian.co.uk/property/story/0,14422,1669126,00.html
http://www.moneyweek.com/file/2693/why-our-experts-are-still-pessimistic-about-property.html

Just for the record I bought a new build last year for £325K and its now worth about £360K so I dont think it was overpriced, and if fact taking teh incentives offered into account the house was cheaper than anything else I could have got in the are with the same square footage so its not all as black and white as some on here would have you believe!

How did you establish that it's now worth £360K? If you sold it, are you confident you would get £360K for it? What will it be worth in one or two years time?

terrierlady

what good market research this thread is,, makes me smile on a development of 30 homes are we saying the developer is awaiting 30 mugs to come and buy, no way,a home is worth what people pay for it, priced to sell in a well researched market we dont pluck a price out of fresh air!!!!!
yes all new homes do have a down stairs loo for the reason given, light switches should also be lower and door frames wider for ease of use for wheelchair users.
if a site is overpriced it does not sell, people are not stupid, look at the knowledge of people posting on this site, research the area well and prices of same square footage property near by and im sure you will see that new homes can represent good value for money.

lilyann1

Yes new builds are overpriced,you basically pay a premium for all the new equipment and generally when things have settled down new builds don't have too many major problems;ie: central heating is new,roof is new,no damp,well insulated all those sorts of things.
We bought our 3 bed new build back in 1993 at £115k when other 3 beds around were about £90K!!!! We had problems at first with heating and things not finished off properly but the builders were on hand to call back and correct these things.After that over the last 12 years apart from having gas heating service contract,which we definitely needed, we have loved our new build and had no major problems with it at all.

bylromarha

terrierlady wrote:

if a site is overpriced it does not sell, people are not stupid, .

Good point.

A similar house to the one we bought is on sale in a different, (not nicer, just different) part of town, smaller garden.

Selling for £180k (ie £50k more than ours)...we also looked at the exact house last June when they were just being finished. The builder is still trying to sell them 18 months after building, but won't reduce the price. hence all the houses are empty.

RHemmings

terrierlady wrote:

what good market research this thread is,, makes me smile on a development of 30 homes are we saying the developer is awaiting 30 mugs to come and buy, no way,a home is worth what people pay for it, priced to sell in a well researched market we dont pluck a price out of fresh air!!!!!
yes all new homes do have a down stairs loo for the reason given, light switches should also be lower and door frames wider for ease of use for wheelchair users.
if a site is overpriced it does not sell, people are not stupid, look at the knowledge of people posting on this site, research the area well and prices of same square footage property near by and im sure you will see that new homes can represent good value for money.

Disagreed. A lot of people are stupid. As amply proven in previous house price boom/busts, tech share boom/busts, gold price boom/busts, south sea bubble, tulip mania. People pay way over the odds for poor quality clothing with "designer" labels. People buy SUVs thinking they're safer than regular cars. People buying all sorts of "alternative remedies" believing that "it worked for me" because their common cold disappeared within a week, blah blah blah blah blah.

In the bubbles I mentioned, lots of people thought that paying very high prices for shares, or gold, or houses, whatever, was reasonable during the bubble, but in hindsight we can see that the prices paid were ridiculously overpriced.

But even if we ignore the bubble in house prices, it's still possible for newbuild houses to be overpriced. Simply compare them to the value obtained by buying a house that's only a few years old in a similar or better area, similar or better house. Certainly where I live, the extra amount that people are paying for newbuilds, assuming that the sale prices are anything like the asking prices, just doesn't make sense.

And yes, I do believe that developers are building estates of many more than 30 houses, and waiting for 30 mugs to turn up and buy them.

whambamboo

terrierlady wrote:

what good market research this thread is,, makes me smile on a development of 30 homes are we saying the developer is awaiting 30 mugs to come and buy, no way,a home is worth what people pay for it, priced to sell in a well researched market we dont pluck a price out of fresh air!!!!!

Of course people are stupid. It's like my friend who bought a new Volvo and was boasting about his £300 discount and then revealed he was paying an extra 3-4% on the loan because he got finance from them, and 'it's only 3%', which was more than wiping out his saving. And the same guy who boasted about his mortgage rate but didn't take into account the huge arrangement fee.

Or the idiot that's going to pay £500,000 for this tiny 2 bed new build flat, with only one reception, no separate kitchen

http://www.rightmove.co.uk/viewdetails-7371091.rsp?pa_n=1&tr_t=buy

The builder there is only looking for one kind of buyer: a stupid one. That flat is not in Docklands overlooking the Thames. It is not in Chelsea. It is in Woking, where the same money buys a 5-bed detached house.

Even if that flat sells for £400k it's still a rip-off. They are waiting for a mug. There is no other possible buyer.

It's very simple: if the new house costs substantially more than an existing house of the same spec, it's too much. Evidence is that you can get a comparable old house in the area for a lot less money.