New builds...how much of a premium on the price

Marmot

Hi,

I'm looking into the possibility of buying a new-build property using the Help to Buy Equity Loan scheme. I keep reading articles which say you pay a premium in terms of the price you pay for a new build property.

But I was wondering if anyone knows or if there's something documented anywhere which quantifies how much in ballpark terms that this premium is?

Is it 15%? More? Less? Perhaps there's no real answer to this but thought I'd just ask.

I'm basically trying to decide whether I use the H2B EL scheme to be able to have a larger amount to spend on a house or if I go it alone and buy an older property that costs less.

Hmmm, perhaps there's no answer to this really, just thought I'd ask...

Thanks in advance for any help.

Marmot

squinz

I think you definately pay a premium for a brand new property. From my research they dont increase in price in line with older properties because once lived in they lose their appeal. A bit like when you buy a brand new car and drive off the forecourt...

nubbins

There isn't really an exact figure but I reckon you are in the right ball park. You can check it out and compare what similar properties say 5-10 years older are selling for, if say 3 bed semi's are going for 400k but new builds are 440 then you can get a rough idea.
One thing I would say with a new build, yes they do command a premium but you could argue that most older properties need something doing to them, you may need a new kitchen, bathroom, decor etc so by the time you tot that up there may not be too much of a difference. If you are wanting to add value then a new build isn't a good bet but is good for a hassleless move.

marksoton

The ( Supposed ) premium price on new builds wouldn't bother me.

The quite often poor construction, sales pitch and dealing with a developer on their terms would.

As would generally smaller property for your money and potentially living on a construction site for months.

But each to their own.

J_i_m

squinz wrote: »

I think you definately pay a premium for a brand new property. From my research they dont increase in price in line with older properties because once lived in they lose their appeal. A bit like when you buy a brand new car and drive off the forecourt...

I recently viewed the showroom of "new build" apartments and I have to admit that initially (perhaps for about 30 seconds) the magpie element within me was going "ooooh shiney".

That was soon snuffed by the tour of the actual plots which were literally still building sites (I was even required to wear a hard hat) and so far from being finished that it took a lot of imagination to visualise the final product.

My imagination was not showing me good things.

I think builder/developer/agents etc use words like "modern" and "contemporary" to try and justify the premium. I tend to hear it as "yeah, we tried to make it look fashionable"

I couldn't help but suspect that it'd all look very tatty after a couple of months of being lived in.

Sadly... There are more than enough people to fall for it and who pay the premium. That and the general lack of supply to demand contribute towards keeping prices high across the board.

cakeforbrains

Just for another point of view:

We rent our house, but have lived here from brand new. Initially, living on a building site was irritating, but in some ways quite fun.

The house itself (constructed by a fairly small local builder and on a small new estate) is of high quality and very, very spacious. We've recently agreed to buy from the landlord and, two years after it was built, it's been valued by agents as having gained about 13% in value.

daveyjp

Theres no premium for a new build. They are priced higher because the first buyer has to pay todays prices for land, materials and labour.

An older house has increased in value due to house price inflation.

lydriver

to take away the 'brand new' factor, say a 10 yr old house and 100 yr old house in the same street/area were each bought for 100k today - would they both likely increase in value the same amount over the next x number of years?

marksoton

daveyjp wrote: »

Theres no premium for a new build. They are priced higher because the first buyer has to pay todays prices for land, materials and labour.

An older house has increased in value due to house price inflation.

Whilst i agree this is true to an extent and makes perfect economic sense i personally believe there is a premium.

Some people just want a shiny new place, and boy do the developers know that and price accordingly. It is what it is though, simple supply and demand.

dinkylink

I would say round my way new builds have a good 10% premium on similar properties. But then again I don't think you'd lose money if you bought one round here regardless due the buoyant market. Unless you sold it again straight away!

Prothet_of_Doom

Put it this way.

http://www.rightmove.co.uk/property-for-sale/property-30414828.html

This is struggling to sell for £260K (according to my sister in law) it was built in the 1960's



where as http://www.rightmove.co.uk/new-homes-for-sale/property-47954356.html?backListLink=%2Fnew-homes-for-sale%2Fproperty-47095801.html%3FbackListLink%3D%252Fproperty-for-sale%252Fmap.html%253FlocationIdentifier%253DOUTCODE%25255E1371%2526insId%253D1%2526minPrice%253D240000%2526maxPrice%253D300000%2526minBedrooms%253D3%2526maxBedrooms%253D4%2523_includeSSTC%253Don%2526auction%253Dfalse%2526locationIdentifier%253DOUTCODE%25255E1371%2526maxBedrooms%253D4%2526maxPrice%253D300000%2526minBedrooms%253D3%2526minPrice%253D240000%2526previousSearchLocation%253DL37%2526radius%253D0.0%2526searchLocation%253DL37%2526searchType%253DSALE%2526useLocationIdentifier%253Dfalse%2526box%253D-3.08203%252C-3.05328%252C53.53750%252C53.54977%2526popupPropertyId%253D47095801%26fromMap%3Dtrue is £315K