Just bought a new apartment will it gain value?

NathanGent

Hello everyone, me and my partner are in the process of buying a new build apartment as our first starter home, we would be looking to leave after 5 years to get a house and I was wondering if the apartment I'm about to buy is likely to increase in value and gain more equity for when me and my partner want to move to a bigger house in 5 years time?

Browntoa

Simple answer is , nobody knows ...

vuvuzela

NathanGent wrote: »

Hello everyone, me and my partner are in the process of buying a new build apartment as our first starter home, we would be looking to leave after 5 years to get a house and I was wondering if the apartment I'm about to buy is likely to increase in value and gain more equity for when me and my partner want to move to a bigger house in 5 years time?

Couple of initial thoughts.

1: Nobody has a crystal ball regarding house prices. Brexit may ruin everything in March, or it may not. Interest rates will likely go up over the next couple of years, this will have an effect on mortgages, and possibly house prices.

2: New builds can even devalue slightly in price after purchase, in 5 years time there may well be newer ones built near you that are more desirable.

3: There will be some equity built up automatically if you are on a repayment mortgage, even if the price remains static.

Sibz

You may be as well asking a magic 8-Ball.

Numerous factors... New builds tend to struggle to maintain value - as soon as you move in they're now 2nd hand. Unless you're going to be doing some upgrading work then why would somebody pay more for a 2nd hand home than you paid for it brand new? Of course this can change (in either direction) if local amenities are increased/decreased in the local area etc.

HTB is available on new build houses only which allows buyers to aim a bit higher in cost when buying so if your price range is close to some types of new build house then it could work against you on the market.

Just a personal point of view here: I'm looking for places currently and I've seen a nice one built 2 years ago and the people are asking for over 2.5k more than they bought it for brand new, no extension work or anything has been done - there's not a chance in hell that I'm paying that for it in the current market. I'd be offering below what they paid - because everything there is more worn and torn than it was - Boilers further down the line (and older than the one I had installed in my own property) for a start.

So unless you are purchasing the place for below current market value it is unlikely to be worth more so soon.

theartfullodger

Can tell you in 5 years time, otherwise a guess. Property prices do drop from time to time, sometimes a lot.

pinkteapot

Waiting for Crashy Time to get to this thread...

Pixie5740

If only there was a section of the forum dedicated to Debating House Prices and the Economy.....

hazyjo

One house I had sold for pretty much the same as I paid 5-6 years before (£275k-ish). Another more or less doubled (sold for over £500k). Property is always a gamble. It's a bit like Monopoly money too - that's not profit in my pocket, as whatever you go on to buy will have gone up too. Unless you're buying as an investment...

If prices do drop, the price of houses will drop too so you may find you're able to buy something that you wouldn't have afforded in a rising market. Swings and roundabouts!

Common sense and basic property knowledge would say they'll be static or drop over the next few years - but don't quote me on it!

People are reluctant to move (buying or selling) while Brexit is hanging over us so that tends to bring prices down.

Pay as much of your mortgage down as possible to keep equity in it.

Kevie192

Most new build houses drop dramatically in value as soon as you move into them as they're no longer new; just like a new car's value drops when you roll off that forecourt.

Nobody can really tell you whether you'll recoup that in 5 years as it depends on a huge number of factors. However, you also have to factor in the cost of an additional round of solicitors fees, stamp duty, moving costs etc. etc. that you'd need to recoup as well.

General rule of thumb I've seen on this forum is that if you intend on staying in a house for 5 years or less, you're best renting as it will cost you less. That's without the drop in price you experience when buying a new build.

But at the end of the day, it's up to you! You pay your money, you take your chance!

Kevin

ReadingTim

The increase or decrease in price will be equal in hundreds of pounds to the length of this piece of string in millimetres.

So, how long is a piece of string?

SmashedAvacado

if you plan to have a repayment mortgage then you will have more equity than you started with if your property does not fall in value. Whether 5 years is long enough to gain enough value to cover selling costs and an extra lot of buying costs, no-one knows, but it will depend slightly on your price range. A new build will probably not hold initial value quite as well - but it really does massively depend on so many factors that you can't control.