One in eight new-builds sold at average loss of £22,000

ONE in eight new-build homes are being resold at a loss, with the average property losing £22,000 of its value.

Homeowners are twice as likely to resell new-build homes at a loss compared with older homes, according to Hamptons estate agents. Some 12pc of new properties were resold for less than the purchase price last year, while 6pc of older homes were affected.

Four fifths (81pc) of new-build owners who made a loss were selling a flat. The average loss on a new-build was 7.8pc – or £22,000.

Owners had typically held the property for 8.8 years.

Paula Higgins, founder of the Homeowners Alliance lobby group, said developers generally sold new-builds at a premium, meaning prices would subsequently fall to the market rate in the area.

The Help to Buy scheme, which closed to new applications in October, had further increased the prices initially paid for new flats. As part of the scheme, first-time buyers could buy a new-build property with a deposit of just 5pc, with the Government providing a loan of up to 20pc of the purchase price – 40pc in London – which was interest-free for five years.

Since the scheme was introduced in 2013, prices for new-build flats have soared by 55pc, compared with 17pc for older flats, according to Hamptons. Experts said prices had been inflated by the scheme and then had converged on the market average.

Paul Cheshire, a former government adviser and emeritus professor at the London School of Economics and Political Science, said: “There’s absolutely clear cut evidence that Help to Buy inflates the prices of those homes that qualify.”

He also said that there may have been an “oversupply of flats” in big cities.

Andrew Wishart, at Capital Economics, said problems with cladding and fire safety issues since the Grenfell Tower fire in 2017 had also affected the resale values of new-build flats, with lenders refusing to grant mortgages on them.

He said: “Quite a lot of flats were sold for large discounts as they were only available to cash buyers because of fire safety issues.”