A speculative post on new build prices

fackers_2

Hello,

Not bought a new build previously but now highly considering it since the property is in a great location and ticks almost all boxes at the moment. 

With the speculation (and I stress this) that there is likely to be an economy crash thus a drop rumoured by some economists to be around 10%.

— In your experience has new builds been known to also drop the prices inline with the dip or do they stand firm? —

Of course as anyone, negative equity is a horrible feeling and a situation you never want to find yourself in. Just trying to understand if the prices on these houses ahead of completion can go down as well as up.    


Cheers in advance.

tigertrio

House prices level off in the short term. Next summer they tick over at a slow rate. Average 12-month rise, 3%.

RM_2013

I wondered this.  We were considering selling and moving into rented and then looking for a new build as there are 3 planned local developments.  1 have been selling plots for some time and only a couple seem to have been reserved and the other 2 developments still haven’t released launch dates or prices.  

The development that is selling plots does not seem to have reduced prices and some plots seem to have been available for months now.  They have been offering incentives such as kitchen upgrades and deposit boosts.

We ended up finding the perfect house which is around 14 years old on an existing estate which ticked all the boxes for less cash in the end anyway but will be interested to see how these new developments are priced 

BikingBud

2 furlongs and 3 chains!

Cheesy77

Our local sites seem to offer stamp duty contributions, free upgrades and incentives rather than dropping prices. If there is a significant fall in prices then they'll probably have to get into the reductions as well. Or if its big developers like Barratt I'd not be surprised if they just hold on to them awaiting a recovery in prices. They make £1billion+ a year in profit so sitting on some properties for a while is probably not an issue

Smoulder80

We bought a new build in 2011 from Persimmon. They had been looking at incentives but banks started reducing the valuations in line with these mucking with LTVs.

when we originally offered the house was £225k and we went in at asking but looking at 100% part ex value on our home.

when this was not forthcoming we pulled out but a month later got a call to say the let ex value was now on and the value of the house had gone down to £180k. This was 2 months before their year end.

so it does happen, but even after 2008 it took a couple of years to work its way through.

another nice win for us was that we got £100k for the part ex and they sold it for £65k!

GDB2222

New builds normally sell at a premium relative to secondhand properties of about 10%. If prices generally fall, I expect new builds would fall in line with the market, retaining roughly the same premium.

The likes of Barrett can’t just stop selling properties, as they have a massive sales and management structure to maintain. Besides that, they bought a lot of land ages ago at lower prices, and they can afford to sell more cheaply and still show a healthy, if somewhat reduced, profit. 

fackers_2

Smoulder80 said:

We bought a new build in 2011 from Persimmon. They had been looking at incentives but banks started reducing the valuations in line with these mucking with LTVs.

when we originally offered the house was £225k and we went in at asking but looking at 100% part ex value on our home.

when this was not forthcoming we pulled out but a month later got a call to say the let ex value was now on and the value of the house had gone down to £180k. This was 2 months before their year end.

so it does happen, but even after 2008 it took a couple of years to work its way through.

another nice win for us was that we got £100k for the part ex and they sold it for £65k!

Fair play, a rare win! 

fackers_2

It’s a well known house building company. They pounced on my initial email and so I think they are in need of the sales as they are ready to move in next month. Lovely property and plots too. 

I’ve been regularly watching the market in my sold house’s location and new desired location and both seem to have drastically slowed and many reduced prices posted.

silvercar

I would say the first few properties on a development may be priced more reasonably to attract interest. Also to show people that prices go up, so encourage others to buy quick. Generally new builds attract a premium that is gradually eroded over time.

Exception is those sold with help to buy. These are highly (over) priced as customers are caught with having to buy a property offering HTB and so it is a developers upper hand and price accordingly. When it comes to selling them on, they aren’t eligible for HTB and so the number of potential buyers is reduced. Particularly flats in areas with high prices, as generally these were bought by young people who tend to need to move on quicker than the average due to the break ups, wanting kids, moving out of city centres etc.

FreeBear

fackers_2 said: Of course as anyone, negative equity is a horrible feeling and a situation you never want to find yourself in. Just trying to understand if the prices on these houses ahead of completion can go down as well as up.

Negative equity is only a problem if you need to remortgage or sell. Over the long term house prices will go up - By long term, I mean 15/25/40 years, not 3-5.