New build prices as house prices fall

ceevans14

Hi all,

We are looking to buy a new build on a lovell homes development. The house we would like has not been released yet, however we can see from the pattern of houses released that developers tend to add a fair bit on to each asking price as houses become available (for example one house type was £287k in April 2022, then £295k in July 2022). As house prices are forecast to fall, do asking prices from developers also tend to fall or is it on us as the buyers to negotiate the price? If we reserve the new build at a certain price now and house prices fall further before we exhange/complete its a bit of an odd situation. 

waseem432000

I think most builders and housing associations would resist the selling price drop as much as they can and instead try to offer you extra incentives on the house itself like mortgage or energy bill contributions for a bit or new carpets in rooms etc. I think they would also ask for a non refundable booking fees when they book a property and take it off the market for you. 

We all know it’s not last year’s market right now and they won’t probably add too much on top of newly released houses but then it’s all guesswork. 

Merlin139

If prices drop too much they may well reduce the speed that they build the houses and when they release them. I think a lot will depend on how well and how quickly houses are selling.

When we bought our new build 22 years ago we really wanted the identical house across the street from us but it was not released. In the end it was the last house out of 130 built and 3 years later. By which time the price was £80K more than we paid for ours.

I have a development behind my house which will have over 500 hew houses on it. I have followed the planning process and one of the documents shows the minimum price they expect to get for each property. This spreadsheet gives all associated costs and what the expected profit will be over the whole development. Great for them if prices rise but not so good if they are falling. Looking at the prices they are hoping for I think they may well be disappointed. But what do I know.

I guess a lot will depend on how much interest is in the property that you want. Good luck with whatever you decide to do

[Deleted User]

The problem with offering extras instead of a price drop is that it doesn't help you with your mortgage and deposit.

Developers will just have to accept that prices have come down. All you can is make them an offer for what you can afford, and if they say no then move on.

RelievedSheff

The new build we bought 4 years ago was heavily discounted when compared to other sales of the same house type on the development. It was a completed plot that sat around unsold so they needed it off their books.

They wouldn't drop further on the price but they did throw in an excellent package of incentives and gave us a very good price for part exchange on our old property.

You need to look at the package as a whole rather than just the headline price of the house.

They are still building on the development where we are and sales have slowed down but so has the rate of construction. They will slow right down if sales don't pick up or stop building completely. They will not sell the properties for less than they want for them.

TheJP

House prices aren't falling as fast as (Crashy) people and their crystal balls forecasted, my house has been valued £103k more now than it was in 2021 when i bought it. You can negotiate until contracts are exchanged but usually its often harder when you cross the developer threshold of commitment. They will lure you in with cheap freebies. Try and negotiate things like SDLT payment and legal fees etc. That way its money in your bank account. 

[Deleted User]

TheJP said:

House prices aren't falling as fast as (Crashy) people and their crystal balls forecasted, my house has been valued £103k more now than it was in 2021 when i bought it. You can negotiate until contracts are exchanged but usually its often harder when you cross the developer threshold of commitment. They will lure you in with cheap freebies. Try and negotiate things like SDLT payment and legal fees etc. That way its money in your bank account. 

Valued by whom?

GixerKate

All you can do is ask.  Many developers won't drop the price but will chuck in extras, I think I've seen recently things like 5% cashback on completion, not sure how that works though.

However, when I bought my new build in 2020 I negotiated on price same as any other house and haggled down to an amount I was happy with.  This also included a re-negotiation during the process as I was selling a house and my buyer had dropped out and I had found another buyer but with a lower offer so needed to reduce my offer on the new build, which was agreed.

TheJP

[Deleted User] said:

TheJP said:

House prices aren't falling as fast as (Crashy) people and their crystal balls forecasted, my house has been valued £103k more now than it was in 2021 when i bought it. You can negotiate until contracts are exchanged but usually its often harder when you cross the developer threshold of commitment. They will lure you in with cheap freebies. Try and negotiate things like SDLT payment and legal fees etc. That way its money in your bank account. 

Valued by whom?

A RICS surveyor on behalf of my mortgage company.

jonnydeppiwish!

Just looking where we are and they are now multiple new builds that are showing as reduced on RM

[Deleted User]

TheJP said:

[Deleted User] said:

TheJP said:

House prices aren't falling as fast as (Crashy) people and their crystal balls forecasted, my house has been valued £103k more now than it was in 2021 when i bought it. You can negotiate until contracts are exchanged but usually its often harder when you cross the developer threshold of commitment. They will lure you in with cheap freebies. Try and negotiate things like SDLT payment and legal fees etc. That way its money in your bank account. 

Valued by whom?

A RICS surveyor on behalf of my mortgage company.

So not someone actually thinking of buying it then.

It's worth what someone will pay for it. You can get it valued all you like, but in the end nobody is obliged to pay what your survey said.