High house prices rising in working class areas, is it fair and is there anything that can be done?

RMiller95

Hello,

My partner and I are looking for a house in the Newcastle area and the search has been narrowed down to two sites. Both sites are the same house builder and we have just been informed this morning that as of the 17th Jan 2022, they are putting the prices up by 3%. This may not sound much but when you're looking at a house that was £193,000 and its now going to be closer to £199,000, and then the prices of energy bills going up recently and going higher soon, its literally pricing people out of buying houses, especially as a first time buyer.

They have said it is due to a rise in the price of materials, but I find it very hard to understand the 3% increase which means each house on the site will be roughly £5,000 more expensive. I understand materials prices have gone up, but not by that much and house builders already make an extortionate amount of money from developments that I can't see how they can justify the increase? The site in question is being developed until 2035, so its not like they are trying to make some money on the last few houses.

In an area where the help to buy cap is £186,100 meaning buying most houses is very difficult, and also being in a working class area, can they justify pricing people out of an already inflated market for this reason? Is there anything we can do to contest it? 

Please note, we haven't reserved the house and are currently going through affordability etc.

I hope someone can help or explain if we have any options going forward.

Kind regards,
Ryan

user1977

If there's demand for affordable housing then it's up to the planners to make appropriate policies and ensure developments have some/all housing affordable one way or another - not much you can do if it's a development which already has planning for mainstream housing, it's left to the market to dictate the price.

RelievedSheff

As the system works at the minute there is absolutely nothing stopping them raising their prices. To be fair they are probably only raising them in line with property price rises in general in the area. 

It is of little help I know but you are far from alone in your situation battling against rising house prices.

You have not reserved the property yet so no price has been set. As soon as you reserve a house the price will be in the contract. Up to you but if you want to beat the price rise you have until the 17th to reserve at today's prices.

daveyjp

Materials have increased 40-50% in 12 months, trades rates have increased, diesel up etc.

Considering inflation is around 5% a 3% increase on a new property isn't welcomed, but it isn't excessive.

RMiller95

Hi user1977,

Its not an affordable house that we are looking at and there is specific criteria for getting them so its just a 'normal' house we are looking to buy. Yes there is demand but I can't see how its justified when they are pricing people out of them or forcing people into a worse financial position especially given the current energy situation and increase in mortgage rates going forward. 

RMiller95

Daveyjp,

It is excessive when you look at how much they actually make per property and how big the site is. I could understand if it was a smaller amount but the house prices are already inflated as a result of the market which is fair enough, but the inflated price should cover the increase in materials instead of capitalising on a bleak situation for new and first time buyers.

Elliott.T123

RMiller95 said:

Hi user1977,

Its not an affordable house that we are looking at and there is specific criteria for getting them so its just a 'normal' house we are looking to buy. Yes there is demand but I can't see how its justified when they are pricing people out of them or forcing people into a worse financial position especially given the current energy situation and increase in mortgage rates going forward. 

Unfortunately the housing developers don't care if they price some people out, they don't care if they put buyers into worse financial positions, they don't care if a price rise is justified or not.

All they care about is what is the highest figure we can price a house and it still sell to someone, as long as there are people willing to pay the price then they aren't bothered if that prices out others.

To be fair to them that isn't unique to house builders, if you owned a house and it went up in value 50% would you put it on the market at that new value or would you say, you know what that isn't justified and might price people out, I am only going to price it at a 10% increase to be fair to other people

RS2OOO

Materials have gone up a lot, doubled in many cases. 

It is due to these price increases that its now cheaper in many cases to buy a pre-extended house than pay for an extension on existing house.

Since you have until 17th Jan to reserve at the lower price, that's your best way forward.

RMiller95

Elliott.T123 said:

RMiller95 said:

Hi user1977,

Its not an affordable house that we are looking at and there is specific criteria for getting them so its just a 'normal' house we are looking to buy. Yes there is demand but I can't see how its justified when they are pricing people out of them or forcing people into a worse financial position especially given the current energy situation and increase in mortgage rates going forward. 

Unfortunately the housing developers don't care if they price some people out, they don't care if they put buyers into worse financial positions, they don't care if a price rise is justified or not.

All they care about is what is the highest figure we can price a house and it still sell to someone, as long as there are people willing to pay the price then they aren't bothered if that prices out others.

To be fair to them that isn't unique to house builders, if you owned a house and it went up in value 50% would you put it on the market at that new value or would you say, you know what that isn't justified and might price people out, I am only going to price it at a 10% increase to be fair to other people

I totally understand for a private seller, but for a national house builder, surely they have a duty to the local public to ensure they aren't going above and beyond. If not, there should be something in place so they can only make a certain percentage of profit per house or a house type in an area should be capped.

user1977

RMiller95 said:

Elliott.T123 said:

RMiller95 said:

Hi user1977,

Its not an affordable house that we are looking at and there is specific criteria for getting them so its just a 'normal' house we are looking to buy. Yes there is demand but I can't see how its justified when they are pricing people out of them or forcing people into a worse financial position especially given the current energy situation and increase in mortgage rates going forward. 

Unfortunately the housing developers don't care if they price some people out, they don't care if they put buyers into worse financial positions, they don't care if a price rise is justified or not.

All they care about is what is the highest figure we can price a house and it still sell to someone, as long as there are people willing to pay the price then they aren't bothered if that prices out others.

To be fair to them that isn't unique to house builders, if you owned a house and it went up in value 50% would you put it on the market at that new value or would you say, you know what that isn't justified and might price people out, I am only going to price it at a 10% increase to be fair to other people

I totally understand for a private seller, but for a national house builder, surely they have a duty to the local public to ensure they aren't going above and beyond. If not, there should be something in place so they can only make a certain percentage of profit per house or a house type in an area should be capped.

Like I said, that's a job for the planners to do. There's no general obligation on builders (or any other business) not to make too much profit.

theoretica

Prices are going up because they can sell houses for that much.  If the developer priced the houses at £150k someone would swoop in before you, buy them up and then turn round and try to sell them on at £190+k .  Unless there was a significant legislative restriction - as with affordable housing.