According to latest figures from the Land Registry, new-build homes are selling for a premium of £65,000 compared with existing property for sale. This premium increased by £5,000 over the last twelve months.
Here in East Renfrewshire we have seen a huge surge in new homes being built, especially around Newton Mearns and the Maidenhill area with the inclusion of a new primary school. To date, only around a fifth of the planned properties have been completed.
Land Registry figures show that UK new homes sold for £290,176, compared with an average sale price of £224,729 for existing older properties.
We look at what is driving this large price difference and what do you get for the extra money and if it’s worth paying.
There are several reasons for these figures on newly built homes over recent years.
First, despite being surrounded by new homes going up at a rate of knots in East Renfrewshire, on a national level this housebuilding activity has previously mainly been in the southern regions especially London. From April to June this year, 6,000 properties were built in London and 6,584 in the south and some of this premium can also be accounted for by housebuilders targeting the upper-end of the market and building luxury homes in some locations.
There is also the possibility that the Help to Buy scheme is driving up property prices as the initiative only applies to new properties and there have been claims that the popularity of Help to Buy has created a disparity between supply and demand, driving up the cost of new builds.
Buyers looking for a new home need to look at whether the build premium is worth paying. For those taking advantage of Help to Buy, it can be a worthwhile investment as they can benefit from an interest free loan enabling them to buy a larger property or move to a more desirable area.
In addition, new homes are generally more energy efficient than older properties, require less maintenance and have a warranty should anything go wrong. In addition, new developments sometimes offer property types that are not currently plentiful among the existing housing stock such as good quality apartments for those looking to downsize and detached family homes, especially where schools catchment areas are in high demand. Here in East Renfrewshire there is a shortage of good quality family homes close to Scotland’s top performing schools.
New homes also tend to be cheaper to run, feature modern conveniences, sufficient parking and sometimes good quality lift access. The apartments available for those looking to downsize are exceptional quality and close to amenities such as those we recently sold on Capelrig Road opposite The Avenue.
There are of course some downsides to purchasing a new property. Although the property is seen as turn-key, buyers may need to address snagging issues with the developer.
In addition, newly built family homes can be smaller than their older counterparts with smaller gardens (despite the large show homes) because developers tend to maximise the available space on the development site.
Finally, new homes don’t benefit from an immediate increase in value when compared to existing homes for sale when looking at the increase in house prices in the two to three years following the purchase. However, most people when moving to a family home rather than a smaller starter home see it as a long term move to see the children through their preferred primary and secondary schools. Similarly those downsizing looking for an apartment see this is a long-term move. There also isn’t an option to add value by undertaking large home improvement projects or modernising the property with updated decor but the lack of expense required to get the home up to standard is appealing to many.
If you would like to know more about purchasing a property in East Renfrewshire or would like a comparison of existing properties for sale compared to the newly built homes in the area, talk to us at Nicol Estate Agents.