New build depreciation??????

Hermia

Chanes wrote: »

You do pay more for a new build but they don't always lose money, we have a friend who bought a new build and sold it three years later with a 30k price increase, the estate became a desirable place to live. As always, location is everything.

True. Where I live many new builds go up in price or at least fetch the same amount they were originally bought for. It's partly location and partly because the new builds are different to a lot of the existing properties in the area so there are always people wanting the new homes.

kingstreet

Dhandy wrote: »

I would buy an older house but the 10% is so hard to get unlike the 5%.

What makes you think you need 10% deposit for an older property but only 5% for a newbuild?

There are 95% mortgages for older properties.

If not using HTB Equity Loan, you typically have to find 15% - 20% deposit for a newbuild.

MyOnlyPost

G_M wrote: »

Those built at the beginning will have gone up in value in relation to the price they originally sold for.

But that is not the comparison being made. They will still be (almost cetainly) selling at a discount to the price being charged for the new houses.

The OP is worried about negative equity and therefore the purchase price of the house compared to the value at sale is the only concern. How that stacks up against similar new houses is a secondary concern and only relevant if the price of the new builds is static or falling. If you have to sell at £10k below the price of new but prices of new have gone up £25k then your house value hasn't fallen and you aren't in negative equity.

G_M wrote: »

The market price for properties as whole may rise, or fall over time, but at any given time the 2nd house will sell for less than the oterwise identical new one.

As the OP said: "as soon as you buy the (new) house it depreciates."

Because the purchased house is lower in price than a new built one at some future point doesn't mean it has depreciated as it would still be likely to be worth more than the price paid except in the immediate few months after purchase (assuming an upward trend in general house prices). The OP states they intend to move in 3-5 years and as such what the house is worth immediately after purchase is irrelevant, regardless of the statement made. What matters is how long it takes the price to rebound and whether it will have gone above purchase price when it comes to selling.

Leo2020

I know someone who tried to sell their new build after 3 years. Getting the right price wasn't the problem it was that people kept pulling out once they had seen the leasehold. With new builds now the yearly cost of the lease can go up by a small fortune within a very small space of time. Two buyers decided it wasn't worth it and pulled out, after the second time she took the house of the market and decided to stay put.

I would seriously consider purchasing the freehold depending of course on cost to do.

neilio

I just bought a new build house (freehold), and depreciation had't even occurred to me at all until I started reading a few remarks on this forum. I was intending to remortgage after my mortgage fixed term is up in a couple of years to pay off some debts, but now I'm worried that this won't be possible due to negative equity. Is this a real problem that anyone else has encountered?

My house is on a development that will eventually be approximately 500 homes. There is probably between one-third and one-quarter of the development left to build over the next two or three years.

neilio

My house came in two options. Mine is the "basic" version, whereas there are other identical models which were marketed at a more expensive level due to containing upgraded features (such as additional tiling in bathrooms, tiled ground floor instead of laminate, Sonos sound system throughout, recessed lighting in more rooms, granite work surface in the kitchen, more attractive internal doors, lighting and shelves installed in wardrobes) - these were sold for between 10K and 15K more than mine. But if you look beyond the upgrades, the houses are identical, except their back gardens are half the size of mine.

Presumably those "higher end" houses would be even more prone to depreciation than mine? In reality, do those additional features increase the value substantially, or would RICS not care about them?

ellie27

Everyone I know who has bought a new build house/flat around Glasgow have all found a decrease in price when coming to sell.

I would never buy new-build again.

neilio

ellie27 wrote: »

Everyone I know who has bought a new build house/flat around Glasgow have all found a decrease in price when coming to sell.

How many years later were they selling?

artyclarty

The answer really is it depends. Who can predict what the housing market will be doing in 3 years time.

In the development opposite where my parents live there is a house that has been on the market since the property was 6 months old. It was bought for £280k in 2014 and is now up for "offers over" £270k. It hasn't budged funnily enough. It is technically a freehold, but has a leasehold garage and a private (block paved) road that all the houses on the street have to contribute to and on top of that it also has the dreaded leased solar panels.

They seem rather confused as to why they keep receiving offers around the £230- 40k mark. This is a best case 15% worst 18% depreciation.

I'm not sure what its like elsewhere in the country, but up here in the North East, there are so many new builds going up and its only the real top end (£4-500k luxury homes) and (tiny) 3 bed new builds that are really as they are affordable starter homes. I do wonder what happens when they want to upsize as the floorplans are generally about 1/2- 2/3 tops the size of what I own but cost 2-3 times as much - there is a lot of terraces/ex local authority housing here with good transport links.

Here the logic is who would want to buy a small 2nd hand 3 bed for £150k when just over the road is a much bigger (but older) house that costs £80-90k

nubbins

neilio wrote: »

I just bought a new build house (freehold), and depreciation had't even occurred to me at all until I started reading a few remarks on this forum. I was intending to remortgage after my mortgage fixed term is up in a couple of years to pay off some debts, but now I'm worried that this won't be possible due to negative equity. Is this a real problem that anyone else has encountered?

My house is on a development that will eventually be approximately 500 homes. There is probably between one-third and one-quarter of the development left to build over the next two or three years.

Why would depreciation never occur to you, did you think house prices go up in a straight line? If you are relying house price rises and extra cash to pay off debts then I am afraid you could be disappointed. I'm not a house price crasher but I would be amazed if in two years you had made a substantial profit on a new build at these levels.