The housing market is in an unstable place at the moment with a lot of fluctuation in house prices. As a buyer, you may be considering a new build property when exploring your options and that could certainly be the right decision, as buying a new build comes with many benefits. However, there is often speculation about the re-sale of new build homes and whether they truly hold their value. This is the question we’ll be exploring in this article, as well as other relevant information you should know when purchasing a new home.
Firstly, what are the benefits of buying a new build?
There are many compelling advantages of purchasing a new build over an older property including:
- There is no chain – this can make the buying process go smoother as you’re not waiting for any other property purchases to complete before you can complete yours.
- Everything is new – this may seem obvious, but it is a handy benefit as you can move in straight away without the stress of costly repairs or big renovation projects.
- New builds come with a new home warranty – so you can have extra peace of mind in the event that something goes wrong. Your new build conveyancing solicitors will discuss the warranty with you, to make sure you know what is covered.
- They are more energy efficient – new builds are designed to reduce environmental impact and meet current building regulations, meaning you can save money on your bills.
- Making the house your own – if you buy off plan you can have your input on the design, layout and even the fixtures and fittings to truly put your personal stamp on the property.
- There are schemes that offer discounts on new build purchases – the government has several schemes available that could reduce the price you pay for a new build property including the help to buy scheme and the first homes scheme, which are targeted at first time buyers.
What happens to the value of a new build after purchase?
New build properties, in a similar way to buying brand new car and driving it, will begin to depreciate in value as soon as it is no longer brand new, which was one of its key selling points to start with. Therefore, many mortgage lenders will typically loan a lesser amount (below 90%) of the current property value compared to an existing house that is the same value. This is because the lenders expect that the new build will drop in value within its first few years of no longer being completely new.
What causes new builds to lose their value?
As well as simply not being as new as they were when they were first built, there can be some other reasons why new build properties encounter a drop in value. These include:
- Property developers don’t always build new houses to the best standard
- New builds are often overpriced in comparison to similar older homes in the same area
- The housing market generally might be down at the point of re-sale
- Overdevelopment of property in an area can lead to supply outweighing demand
- The location of new build developments isn’t always as good as it could be
- Builders have the ability to reduce the cost of newly constructed properties sold at a later stage within the same project
How much value do new builds lose?
The market has shown that new builds can lose over 7% of their value over the first few years of them no longer being show home new. However, as well as the drop in value, you should also consider that when selling your property, you might also have missed out on a price increase if you had bought an older home. You should consider what’s most important to you when searching for a property. Whether you decide to buy a new build or an older property, you can find professional and affordable online conveyancing in Newcastle with Toomey Legal.
Is a new build property a good investment?
Buying a new build definitely can be a good investment and the right option if the circumstances are suitable for you. However, it is generally thought that if you’re intending to buy a new build that you should do so with the intention of living in it for a number of years before you sell it, if you’re looking for an investment instead of a long-term home.
If you’re buying a new property and are in need of new build conveyancing in Whitley Bay or Blyth, our team can help. Toomey Legal are experienced local conveyancers with a detailed knowledge of new build property purchase processes and requirements. Get a quote from us online today, we offer fixed fees with no hidden costs. Or don’t hesitate to contact us if you have any questions.