‘Catch-22’ of buying new-build as prices rocket
PRICES are soaring for new-build homes in Nottinghamshire, according to new figures.
Figures from the Land Registry have revealed that the average cost of a new-build in Nottinghamshire was £243,485 in April this year – up by 16 percent from £210,448 in the same month of 2020.
In comparison, existing properties in the area came in at £197,605 on average, which was up 11 percent from £178,017 last year.
There has long been a premium on new-builds, with these homes usually costing significantly more than existing properties in the same area.
Part of this is because housebuilders have always struggled to keep pace with the demand for newly constructed homes – and this has only been exacerbated during the pandemic.
Several factors, including the stamp duty holiday, the lifting of lockdown restrictions, increased mortgage availability and low interest rates, have all contributed to a boom in the property market in 2021.
In what property website Zoopla has dubbed the “race for a space”, in March this year buyer demand was running more than 80 percent higher than the same period in the previous four years, with the supply of homes for sale failing to keep pace with this demand.
At the same time, Covid has wreaked havoc with building sites and new developments, leading to a significant drop in the supply of new-build properties over the last year.
National House-building Council figures show that between April and June 2020, the number of private new homes registered across the UK fell to around a third of the number seen in the same period of 2019. While home building has since recovered to pre-pandemic levels, the overall number of private new homes registered between April 2020 and March 2021 was down by 24 percent on the year before.
Combined with the “race for a space”, this has seen the cost of new-builds shoot up faster than existing homes.
It means new-build homes in Nottinghamshire now cost 23 percent more than existing properties, on average – the biggest gap on record. However, the new-build premium varies depending on where in Nottinghamshire you’re looking to buy. Ashfield, recently acknowledged as the district where prices have rocketed, has also experienced the largest price gap between new-builds and older properties, with the average new-build selling for £229,858 in April – 45 percent more than the average sale price of £159,059 for an existing home.
Meanwhile, Broxtowe has the smallest gap, where the average new-build sold for £232,993 – 10 percent more than an existing property at £211,965. But first-time buyers in particular are most likely to be impacted by rapidly rising new-build costs.
In some cases the only way to get on to the property ladder is to opt for a new-build, which often comes with the advantage of buying with a scheme such as Help-to-buy or Shared Ownership – such schemes are only available when buying a newly constructed home.
Buyers often see other benefits of new-builds including having all the latest fixtures and fittings, higher environmental standards and lower bills, and no chain.
However, the rising cost of new-builds won’t necessarily translate to a faster growth in value when it comes to reselling.
Many of the benefits of buying a new-build disappear on the day you buy it and it is no longer brand new, meaning a one-year-old property may fall in value as buyers look at new-builds elsewhere.
If you are buying a new-build, it makes sense to live in it for the longer term.