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

AnnieO1234

I can only share you my experience. We moved into a new build in 2012; yes there was an uplift in the region of 20% on local prices for similar but older houses. The home we bought is on a large plot finished to a high standard. We purchased it when my oldest son was less than a year on the very basis that it would be easier all round. We were only interested in new build. My husband worked away at the time so we knew there'd be no time to really deal with big issues so it made sense to get something that even if problems occur aren't down to us.

We've also seen a 15% increase in home values on our estate (180 dwellings) in the last two years (real increase not zoopla pie in the sky) due to area regeneration. Xxx

Kell4life

I was thinking of posting a similar question myself, my husband and i are actively looking to buy, and we are mostly looking at new builds so that we can use the HTB equity loan, but we are also considering slightly older properties. We are generally finding that the cost of replacing carpets, kitchen and bathrooms etc to be more expensive than a newbuild with HTB. On the other hand we are interested in one particular development that has just opened and are quite shocked at the prices of the plots they've released, they're approx £50-60,000 more expensive than a similar style 10 year old property in the next street. I cant see where they have got these prices from and they are just trying their luck as I don't believe the local market will pay those prices, they are hardly being snapped up at the moment.
We are potentially interested in reserving a plot, but will be aiming to get a hefty discount as we are in a good position, but if we cant get it for the price we want, we'll walk away.
If you have enough money for a reasonable deposit and enough to modernise an older house, I think it would be the better buy than newbuild.

Mickygg

New builds do have a slight premium. Main things are:

- no work needed, in almost all cases more money will be spent buying a non new build, so factor this in.
- minimal repairs to be paid, none in first 2 years as usually covered by builders
- 10 year nhbc guarantee, this would have a benefit price attached to it
- per square foot you are paying a big premium in new builds due to nearly all cases being a smaller plot and smaller internal dimensions

Overall in my experience when you take into account the above, the biggest premium is when you work out cost per square foot. On some I've done this and been horrified when compared to an older property.

However people put a lot of money on wanting a house that is brand new, needs no work and hassle free.

I owned a new build and sold it, and I got lower than market movement from the price I paid. But this was expected as I had several years use out of everything and had to factor in an element of depreciation into house price inflation.

clint_S

New builds do have a premium, but you get house that shouldn't require any work and new systems. with warranty, like heating, electrics.


I have just purchased a new build and similar houses in the estate that have gone up for sale have sold within weeks and sold at a higher price than the developer is selling them for, one house sold for 6% more than it was originally purchased for 8 months after being built.

alchemist.1

Really irritating issue and offputting issue with quite a few new builds is that they are selling them as Leaseholds.

alchemist.1

Kell4life wrote: »

I was thinking of posting a similar question myself, my husband and i are actively looking to buy, and we are mostly looking at new builds so that we can use the HTB equity loan, but we are also considering slightly older properties. We are generally finding that the cost of replacing carpets, kitchen and bathrooms etc to be more expensive than a newbuild with HTB. On the other hand we are interested in one particular development that has just opened and are quite shocked at the prices of the plots they've released, they're approx £50-60,000 more expensive than a similar style 10 year old property in the next street. I cant see where they have got these prices from and they are just trying their luck as I don't believe the local market will pay those prices, they are hardly being snapped up at the moment.
We are potentially interested in reserving a plot, but will be aiming to get a hefty discount as we are in a good position, but if we cant get it for the price we want, we'll walk away.
If you have enough money for a reasonable deposit and enough to modernise an older house, I think it would be the better buy than newbuild.

People who need to use HTB loans.

MobileSaver

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.

Sorry but that's nonsense. All other things being equal you'll typically pay a 10% premium on a new build so that you have the privilege of having everything shiny and brand new.

Think about it for a moment; assume land, materials and labour remain at the same price for 2 years... would anyone pay the same price for a 2 year old "new build" as they would for a new build completed today?

makeitstop

MobileSaver wrote: »

Sorry but that's nonsense. All other things being equal you'll typically pay a 10% premium on a new build so that you have the privilege of having everything shiny and brand new.

Think about it for a moment; assume land, materials and labour remain at the same price for 2 years... would anyone pay the same price for a 2 year old "new build" as they would for a new build completed today?

This is based on the assumption in bold above though, and that's hopeful at best in some areas of the UK. However, I would say that yes, there will be a premium on brand new houses, just as there are on "brand new" anything else. The level of that premium will be dependent on numerous factors though, so not everything is equal here.

I don't think there is any doubt that the HTB scheme, as well as a shortage of available property, has helped developers achieve higher prices and due to this, at least to some extent, prices are stiffened on other plots where no HTB is used.