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Why are New Build sold prices (Land Registry figures) so high?
dinofabio
Posts: 245 Forumite
eg
Looking on Rightmove at a flat up that was up for sale. It was a new build in 2006.
The sold price as a new build was £113K (2006)
The same flat sold again in 2011 for £50K
Now prices have dropped in that area by -14% during that period according to the Land Registry. So the valuation should be around the 97K mark all things being equal.
So why the huge difference? It's almost half the value it should be. This always seems to be the case with new build - Very high price when registered as a new build, sells again a few years later at a vastly reduced price.
Is it because the new build sold price was inflated to begin with. If so, why is that? Is it some sort of developers's trick? Or did it really sell for that amount to someone?
Looking on Rightmove at a flat up that was up for sale. It was a new build in 2006.
The sold price as a new build was £113K (2006)
The same flat sold again in 2011 for £50K
Now prices have dropped in that area by -14% during that period according to the Land Registry. So the valuation should be around the 97K mark all things being equal.
So why the huge difference? It's almost half the value it should be. This always seems to be the case with new build - Very high price when registered as a new build, sells again a few years later at a vastly reduced price.
Is it because the new build sold price was inflated to begin with. If so, why is that? Is it some sort of developers's trick? Or did it really sell for that amount to someone?
0
Comments
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What's the area?0
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New builds do lose value over the first few years. Although losses that large sound very unique to that flat.0
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Shared ownership?
Initial value based on lease (100%) but later resale based on actual share purchase, say 50%?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Thrugelmir wrote: »What's the area?
West midlands0 -
eg
Is it because the new build sold price was inflated to begin with. If so, why is that? Is it some sort of developers's trick? Or did it really sell for that amount to someone?
NB always have inflated prices, to take account of the packages that they put in. They often includes loads of appliances, new carpets & curtains, a deposit, low start mortgage, which all has to be paid for.
Of course when the owner goes to sell, not much of that can be passed on and if the bits that can, the new buyer doesn't get to choose the scheme like the original buyer.
Your example appears to have some other circumstances, because they don't drop that much.0 -
Maybe the first owner trashed the place - making it less saleable - so a very low offer was accepted on the place in 2011? Perhaps whomever was selling it in 2011 needed a quick sale so accepted a low price? Who knows? It's even possible that in 2011 there was a very unsociable neighbour or something else that effected the value of the property at that particular moment in time. You may get a better idea if you compare recent sales prices of similar flats in the same area.0
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Maybe a repo / auction sale after bankruptcy?
Could be any number of reasons.0 -
Bought in 2006 (peak time) sold in 2011 (mini-crash). New build also tends to depreciate first before gaining again. My friend sold his fancy Canary Wharf pad for a £90k loss because the flat was marketed during the peak, shortly before the crash. Many investors also made a massive loss at the same development, which I find highly amusing.
That said, it's isn't always like that. We bought our new build flat for £169k in 2009 (listed for £180k) and sold for £210k this year.0
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