Overpriced by £35K?

RoxieW

We recently made a cheeky (yes I was embarrassed!) of £175K on a 4 bed new build marketed originally at £240K, now on at £230K. Its a beautiful house but we cant afford it so thought, what the heck, make a cheeky offer, they can only say no.

Which they did.

However, they're offering us a not yet built 'beautiful, high spec' three bed town house at the 'bargain' price of £185K. Are they kidding?? We currently live in a 3 bed semi - 10 years old, very good condition, garden - your run of the mill 3 bed semi I guess. We had it valued recently at £150K and that was obviously top whack. TBH we were realistically looking for £140K. So they want to sell us a 3 bed town house - not even semi! - in the same area, same living space etc for 35K more? Surely that is a good indication of how over inflated their prices are?

So really, with my rough maths, a decent price for their 4 beds would be about £180K?? So not far off we offered.

Just a bit of a rant really - they didnt come back with a compromise on the 4 bed price - we wont be going for one of their beautiful 3 beds so will just be staying put.

sarah_elton

However, you do always pay a premium on new builds. You can't directly compare a 10 year old house (no matter the condition) with a new build.

Arguably the premium in this specific case is a touch high...

hearts

QUOTE "So really, with my rough maths, a decent price for their 4 beds would be about £180K?? So not far off we offered."

There are a lot of other factors that determine the price of a new build other than what similar properties locally are selling for. The price they paid for the land for one. The cost of the build for two.
I'm not saying your valuation is wrong, just the way you arrived at it.
I went to view a new built 3 bed Town house the price was an astronomical 360k. Directly opposite I could buy an old 4 bed Detatched Bungalow on a decent estate for less. Needless to say these have been up for sale for a while. ;-)

In housing NEW definitely isn't better!

gfplux

sarah_elton wrote: »

However, you do always pay a premium on new builds. You can't directly compare a 10 year old house (no matter the condition) with a new build.

I have seen this statement made a number of times and i am not sure it has always been the case or even if it SHOULD be true today.
I bought my first house (new build) in 1965. I do not remember paying a premium for a new build. I recall that at that time new build was cheaper as you had to add all the things inside and out to it to make it a real home. This could add up to a lot of money.
Is my memory at fault? let me know.

Gorgeous_George

I looked at new builds in 1985 when I bought my first home. If anything, they were slightly cheaper because the estate was still a building site. Consensus at work at the time was that this was normal.

It was a 3-bed semi for £32,500 and I chose an older 2-bed terrace for £24K - with more living area. Houses were getting smaller even 20+ years ago.

GG

Richard_Webster

I think it is true to say that at the moment people seem prepared to pay a premium for new builds. Unless and until the house buying public realises that there is no logical reason for a huge difference the builders will carry on getting away with it.

They appeal to people's pride and point to why "their" properties are better than the older ones with similar accommodation and they use techniques like changing the names and styles. So we had "link detached" which means terraced with a bedroom over a garage and a slightly different roof line and now we have "apartments".

RoxieW

Thanks for the replies everyone. God only knows why anyone would buy a house that depreciates as soon as you move in! There's a very similar 4 bed in the same area, less than 2 years old, on the market for £195K so pretty much as soon as you move in to the 230K house you've lost 35K. Doesn't make sense to me. Although, they've sold 2 out of 4 houses so some people must go for it!

lynnexxxo

RoxieW wrote: »

Thanks for the replies everyone. God only knows why anyone would buy a house that depreciates as soon as you move in!

Probably the same reason why people buy brand new cars that loose thousands the minute you drive them out of the showroom.

hearts

RoxieW wrote: »

Thanks for the replies everyone. God only knows why anyone would buy a house that depreciates as soon as you move in! There's a very similar 4 bed in the same area, less than 2 years old, on the market for £195K so pretty much as soon as you move in to the 230K house you've lost 35K. Doesn't make sense to me. Although, they've sold 2 out of 4 houses so some people must go for it!

I still don't understand your reasoning. Not all new builds depreciate on moving in. Some flats do ( well a lot seem to at the moment ;-) ) but a new built house in a good area can be a very very good buy.

mr.broderick

lynnexxxo wrote: »

Probably the same reason why people buy brand new cars that loose thousands the minute you drive them out of the showroom.

I have yet to see a new car customer drive their brand new car out of the showroom

Rover

hearts wrote: »

I still don't understand your reasoning. Not all new builds depreciate on moving in. Some flats do ( well a lot seem to at the moment ;-) ) but a new built house in a good area can be a very very good buy.

I would just about guarantee if you paid asking price for a current new build, it would depreciate markedly in the short term.

New builds post 2000, despite the premium, have increased in value due to HPI. Now HPI is at the very best stagnant, they will depriciate short term. Take into account inflation and you may aswell burn a few tenners every night.

The whole market will be shook up in a bag with spanners for the next 2-3 years. Hence lowering of LTV's across the board, NR and A+L withdrawing from the new business market and practically all the market bulls disappearing.
The bulls that remain are trying to either rob or mislead you - it's a jungle out there. Don't be a victim.