A speculative post on new build prices

GDB2222

FreeBear said:

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.

That has certainly been the experience in this country, given that we have had a growing population and inflation. I don’t think that it’s an immutable law, though. 

MobileSaver

GDB2222 said:

FreeBear said:

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.

That has certainly been the experience in this country, given that we have had a growing population and inflation. I don’t think that it’s an immutable law, though. 

It's not an immutable law but an ever-increasing population and a housing supply that hasn't kept up with demand for decades is a pretty good indication of how things will be for the foreseeable future don't you think?

GDB2222

MobileSaver said:

GDB2222 said:

FreeBear said:

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.

That has certainly been the experience in this country, given that we have had a growing population and inflation. I don’t think that it’s an immutable law, though. 

It's not an immutable law but an ever-increasing population and a housing supply that hasn't kept up with demand for decades is a pretty good indication of how things will be for the foreseeable future don't you think?

The current uk birth rate is 1.56. That points to a long term decline in population, in the absence of net immigration.

For a few years in the 1980s, the population declined slightly, but it has been growing slowly at a fraction of 1% each year since then. There’s no obvious reason why it won’t decline very slowly, given that there’s a lot of political will to reduce immigration.

GDB2222

Just an example of what can happen if prices get totally out of line. I’m not suggesting that this will happen in the UK. 

newsgroupmonkey_

Quite frankly, if you're looking at a New Build as an investment, you're going to be disappointed.

There's a premium on new builds, what with you being the first person to live in it and having the ability to have it designed to your taste.

If you bought a new build and put it on the market a year later, it's likely you would receive less than you paid.

Think about it like this. If you buy a house and pay £20k for a swanky new kitchen, it doesn't add £20k to the value of the house. This is a whole building.

Have a read...

https://www.quayliving.co.uk/feature-news/is-the-new-build-premium-worth-it-100055

GixerKate

Not necessarily and not in my experience.  I've recently (2 years ago) moved into my newbuild on a new estate, the house up the road sold 14 months after buying it for £100k more than what they paid for it (and thats the actual figures not the For Sale figures).

MobileSaver

GDB2222 said:

MobileSaver said:

GDB2222 said:

FreeBear said:

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.

That has certainly been the experience in this country, given that we have had a growing population and inflation. I don’t think that it’s an immutable law, though. 

It's not an immutable law but an ever-increasing population and a housing supply that hasn't kept up with demand for decades is a pretty good indication of how things will be for the foreseeable future don't you think?

The current uk birth rate is 1.56. That points to a long term decline in population, in the absence of net immigration.

That's the fundamental flaw in your hypothesis, you cannot ignore net migration.

Regardless, in the context of housing, what matters is what the birth rate was 10 to 20 years ago as the babies born then are the ones who need housing now and over the next ten years; for many of those years the birth rate was much closer to 2.0. The official ONS prediction is that the UK population will increase by 2 million over the next ten years.

Similarly, lifestyles have changed; more people than ever live alone and more people than ever own more than one property. So even if the population had remained the same you would still need more houses and we haven't been building enough houses for decades.

So it's clear that the fundamental supply/demand balance is out of whack, add in 2 million more people needing housing over the next ten years and it's pretty much a dead cert where house prices will be in the long term.

JJR45

At the end of the day, developers need to sell houses. So if the market slows up enough they will lower prices.
All companies need cash flow, they can't just hold off until prices go back up again.
We purchased a new build when the last crash was happening and got 25% off vs what people had completed for the month before!
You will find developers are more reactive to prices falling than general sellers as they do not have personal attachment to it, it is just a product.
Developers know that they have to price according to the market, whereas private sellers can tend to bury their head in the sand and try to hold out for what the EA originally valued it at (unless motivated).

Sarah1Mitty2

FreeBear said:

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.

Doesn`t mean you should jump into negative equity if you can avoid it though, rising mortgage rates and the end of help to buy will see new build prices coming down a lot.

GDB2222

MobileSaver said:

GDB2222 said:

MobileSaver said:

GDB2222 said:

FreeBear said:

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.

That has certainly been the experience in this country, given that we have had a growing population and inflation. I don’t think that it’s an immutable law, though. 

It's not an immutable law but an ever-increasing population and a housing supply that hasn't kept up with demand for decades is a pretty good indication of how things will be for the foreseeable future don't you think?

The current uk birth rate is 1.56. That points to a long term decline in population, in the absence of net immigration.

That's the fundamental flaw in your hypothesis, you cannot ignore net migration.

Regardless, in the context of housing, what matters is what the birth rate was 10 to 20 years ago as the babies born then are the ones who need housing now and over the next ten years; for many of those years the birth rate was much closer to 2.0. The official ONS prediction is that the UK population will increase by 2 million over the next ten years.

Similarly, lifestyles have changed; more people than ever live alone and more people than ever own more than one property. So even if the population had remained the same you would still need more houses and we haven't been building enough houses for decades.

So it's clear that the fundamental supply/demand balance is out of whack, add in 2 million more people needing housing over the next ten years and it's pretty much a dead cert where house prices will be in the long term.

I entirely agree with you, in general terms. 

However, that 2 million increase in the population is entirely based on net immigration of 2.2 million. Without that, the population is projected to be static. Suella Braverman would definitely have something to say about that figure.