HELP DESP NEEDED - Do You Lose Money on New Builds...?

Slinky

If you're planning on buying a newbuild on an estate that's nearing the end of the development with no more being built it might be an option. Otherwise I'm with the no-crowd.

I sat in on the appeal by the housebuilder who has been building near us for the past 4 years. The next stage got turned down and they appealed. During the course of the appeal, the local council revealed that at the current rate of occupancy, it could be another 6 years, so 10 years total build, before the site is complete. This is not good news for one of my friends who was the 4th house occupied on the site and has tried to sell a couple of times since moving in.

shimano

When I bought, looked at a few new builds (London). Majority of them were, frankly, horrible. A mixture of

- Absolutely Terrible layouts, rooms without windows, spare cupboar..i mean bedrooms there for the sake of it
- Windows that look like they are from uni dorms, stupidly shaped and often tiny
- "Fitted kitchens" which are cheap and nasty
- Terrible quality interior furnishings
- Have a feeling of a cheap hotel chain inside of them
- Stupidly overpriced

GDB2222

Even if house prices go up in future, you're still looking at a loss on a new-build as the premium disappears relative to buying second-hand. No from me, too.

sonastin

A view from another perspective...

If prices crash like some people predict, you could lose £30k on any house in the next five years. You will lose slightly more on a new build than on an older house but the effects of where the market is going will have more of an impact overally than the new build premium. Another way to look at it would be that if the market rises over the next five years, you might not gain quite so much but you wouldn't lose overall.

Forget about it being a new build. Is it the right house in the right place. I might pay an extra few £k to live in one village rather than having an identical property in the next. When I come to sell, my buyers might actually prefer the other village and won't pay as much because its a compromise for them. The important thing is how much you want *that* house over and above anything else on the market. If you are willing to pay more for it because it is more like your ideal home then it is worth it to you. It might not be worth it to your buyers but that is a risk you take. Given that in 10 years time, a 10 year old house and a 12 year old house will be directly comparable, its unlikely that your buyers will pay extra for that but if you've been happier for the last 10 years in the right house, that little bit extra now might well be worth it. If you'd have been just as happy in a cheaper 2 year old house (if you can find one), then it probably isn't worth paying that premium.

GDB2222

sonastin wrote: »

A view from another perspective...

If prices crash like some people predict, you could lose £30k on any house in the next five years. You will lose slightly more on a new build than on an older house but the effects of where the market is going will have more of an impact overally than the new build premium. Another way to look at it would be that if the market rises over the next five years, you might not gain quite so much but you wouldn't lose overall.

I've no idea how you come up with a £30k figure when houses cost different amounts?

What percentage do you reckon the new-build premium is? I've heard people suggesting it's 20 - 30%. So, if prices stay level you'll be down around 20 - 30% on a new-build when you come to sell in a few years. If prices drop, you'll be down an extra 20 - 30% on top of that. If prices increase by 20 - 30% over the next few years, you'll be looking at just about getting back what you paid for it.

peachie1509

Wow! Awesome people thanks for all your replies.....I have been thinking long and hard. I'm still going to look and see what they say. The house I have seen is in a lovely area Shrewsbury and a 4 bedroom 3 storey with garage is £175,999. 80/20 deal - we looked at new due to deposits for anything else being 25% but have just been told over the last 2 or so days lenders are starting to offer the 10% deposit again. I have found a 3 bed house in a nice area (with garage) for £150k and it would be a stretch to get it only due to deposit. Going to view Thursday so will see and keep you posted. Would much prefer a lotto win wouldnt worry about what I bought then

GDB2222

peachie1509 wrote: »

Wow! Awesome people thanks for all your replies.....I have been thinking long and hard. I'm still going to look and see what they say. The house I have seen is in a lovely area Shrewsbury and a 4 bedroom 3 storey with garage is £175,999. 80/20 deal - we looked at new due to deposits for anything else being 25% but have just been told over the last 2 or so days lenders are starting to offer the 10% deposit again. I have found a 3 bed house in a nice area (with garage) for £150k and it would be a stretch to get it only due to deposit. Going to view Thursday so will see and keep you posted. Would much prefer a lotto win wouldnt worry about what I bought then

Does that mean that 80% of the house costs you £176k? The whole house is £220k? Heck of a difference between that and £150k!

halfone

peachie1509 wrote: »

[...]I have been thinking long and hard. I'm still going to look and see what they say. The house I have seen is in a lovely area Shrewsbury and a 4 bedroom 3 storey with garage is £175,999. 80/20 deal... [...]

Can’t hurt to look

The way you describe the house sounds a lot like the one I looked at, (in a different area…) but I suppose there's standard models across the major housebuilders. I'm not sure whether this is usual, but the ones I was looking at were fee-free for five years, under shared equity. The saleslady told me I should take advantage of that and sell when the five years was up. I thought about what she was saying, and realised if I didn’t/couldn’t sell at that point for the price I wanted/needed, I’d be hit with fees. Just something to bear in mind (if you haven't already) given possible depreciation…

Anyway, best of luck - you sound very positive about everything and look to be weighing up the options…

SilverSix

It's all relative to what exactly you're getting for your money, how it compares to other existing builds in the area and of course what you can negotiate.

I managed to secure a 4 bed new build, semi (detached build joined to a townhouse on one storey) with a garage & garden. For the same price that existing 3 bed builds without garages were going for though they did have larger gardens. I however an 2 minutes walk from a direct line in to Marylebone and look out on to a nice field in a nice area of the development.

It all depends, I don't think you'll loose as much as people are making unless you don't do your homework and severely overpay, however it will be hard to make money in regards to appreciation.

edit: extras are very expensive and can be done much cheaper yourself (tiling especially) so you can save a packet here. These are of course additional costs but you are paying for the premium of having your house just how you want it.

C_Mababejive

Reasons why i wouldnt buy a new build..generalisating a little of course..

The construction methods are poor..i.e wattle and daub
They are poor value for money
Many new builds have social housing schemes embedded in them
You might be living on a partial building site for months
Many are too crammed together for the price they want for them