New build house prices

jonnym8083

Well the point I was making related to the original post of the person stating they are buying a new build and on about price negotiation. Just thought I’d mention our experience that they do have room to move on price in circumstances.

jonnym8083

Depends if anyone else interested in property. For us currently in lockdown it’s easier for them to take off 10k than to pull the sale and try and find someone else. The site is closed and no one will buy without seeing house and valuations all on hold 

numbercruncher8

TBH the pressure is much on the builder.... they could try and stick to the initial price but they would know that the next set of purchasers will be most likely facing the same problems as well. Personally I would stand my ground.
There is always a new build premium, how much really depends on your local area so down to you to find this out and whether you are willing to pay it.
For me I'd estimate asking prices for a new build flat near me to be £425,000-£450,000 vs around £325,000 for an old build with similar floor space. Clearly the new builds come with better fittings (newer bathrooms, kitchens), better communal areas, perhaps better safety (video entry, key-fob operated doors). At the moment what I am seeing is that anyone selling a new build is struggling to sell it, as they are trying to get the same price they paid in 2016, and the market is saying the £100k premium is not worth it.
So over-paying can have its downsides. I am interested in a flat in a 2016 block, some flats sold for £470,000+, quite a few listed and not sold, the only one that went SSTC was one that price cut to £395,000 (although ground floor). It is fair to say that a few people may be stuck for the foreseeable if they cannot afford to take a loss.

jonnym8083

For us we are looking at this house as our forever home... if initially house prices drop they will come back as always... plus we need somewhere to live. This house is costing us £200 a month more than current renting... £100 quid a month each extra going from rented 3 bed semi to 4 bed detached with garage etc so we happy... wouldn’t be buying at the more if was after a quick investment 

pinkteapot

jackc144 said:

Thanks for the response 😊
I understand we will loose the reservation fee if we walk away, my concern is more about not being able to get the funds from a lender if the market price drops but the developer won’t budge on the price. 

My question was more about the house price and what would happen if the market prices dropped. Would the price of the house drop or would the developers be able to keep the price they have set as it’s a new build there’s no bidding involved.  

Sorry if it wasn’t clear ! 

The builder will want as much money as they can get for the house. If all the other houses have got cheaper but you're still happy to pay them the price you'd originally agreed, they'll take your money. 

If prices fall you revise your offer to the builder. They either say yes or no. If they say no, you can still go ahead if you want but if prices have dropped significantly then (1) you may not be able to get the mortgage at that valuation anymore and (2) why would you?!

As the example above from jonnym8083 shows, you have to play hardball when negotiating on new-builds. You're usually dealing with salespeople whose full-time job is negotiating. They can tell if you'll walk away or not. They'll let you walk away then sweat a bit before 'giving in' and dropping the price. 

jonnym8083

We reserved our property in November... we had valuation done of 290k in December we went to them and tried to get reduced then and they wouldn’t budge they said we had to get another lender and do another valuation. We did that but I said they had to pay for the 2nd valuation and they agreed. Reimbursed me with cheque.
we had the second valuation done end of jan... came back 280k. Since then I’ve just not bothered with it... they the ones chasing me... 
it was just all left in the air... 
i told em and said I’m really not bothered about losing £500 reservation fee. They said they would speak to director.
came back after 6 weeks agreeing 290k. I said nah that’s no good. I am in sales myself so know they have wiggle room just need to make them think they are losing the sale but be careful not to push too hard.. I was genuinely prepared to walk away... my partner went mad at me saying 10k is like £35 a month it’s nothing but then said well done to me when they folded last week... I was sure then they we are paying the value of the property... I’m still a bit wary of house prices dropping in the coming months... I know they will push to exchange but will hold out as long as possible to get an idea of the market. If it has dropped I shall go back again and say so and potentially put in a lower offer

jonnym8083

Totally agree deep down we wanted house but I can be very stubborn which helped... our concern too was that if we don’t proceed now all though prices may drop a little we would maybe struggle to obtain a mortgage if lending criteria changed plus for us it will be a home for many years... tbh if the first valuation would have come back at the 310k we would have paid it and be exchanged by now... guess everything happens for a reason 

OldMusicGuy

We made an offer on a new build in mid-March. Although it's a "premium" development, we were able to come to an agreement that was acceptable to us (but we are cash buyers so are in a strong position). We are very happy with the agreed deal, it's our forever home so we won't worry if prices do dip a bit in the short term. 

The developer has recently dropped the price of one type of property on the development, but the house type was overpriced IMO and hard to sell. All the other prices remain unchanged (on paper).

Crashy_Time

OldMusicGuy said:

We made an offer on a new build in mid-March. Although it's a "premium" development, we were able to come to an agreement that was acceptable to us (but we are cash buyers so are in a strong position). We are very happy with the agreed deal, it's our forever home so we won't worry if prices do dip a bit in the short term. 

The developer has recently dropped the price of one type of property on the development, but the house type was overpriced IMO and hard to sell. All the other prices remain unchanged (on paper).

Would you worry if they dipped a lot in the long term?

OldMusicGuy

Crashy_Time said:

Would you worry if they dipped a lot in the long term?

No, because they won't. I've been through many ups and downs of the UK housing market since buying my first house in 1979, so know what I am doing.

You and your house price crash nonsense