Are you considering purchasing a new build property as your long-term investment?
But do new builds lose value once you make the purchase?
Well, this question can haunt your investment decision. So, it’s important you clear all your doubts before proceeding with your property investment journey.
So, we have compiled all the information necessary for you to understand the nitty-gritty aspects of new build depreciation and new build resale value.
Let’s get the learning started.
Find New Homes & Developments For Sale in Birmingham
In September 2022 in Birmingham, there were 29.9% more homes for sale than in August 2022. That includes existing and new development projects, which can be great for your investment portfolio.
But do new builds increase in value, or do they depreciate once you purchase them in Birmingham?
Generally, new builds are sold at a premium because you will be the first person to live in the new build property. You’ll get all the benefits, from a building constructed to the latest energy efficiency standards and modern technology.
It reduces your maintenance cost and bills in the following years of living there.
Unfortunately, the property will lose its ‘new build’ status once you move into your new home. So, you won’t get the new build premium price for your house’s resale.
If you sell your house within 2-5 years of purchasing it, it is likely that the ‘second-hand’ property prices in Birmingham won’t e increase enough for you to get your money back.
However, if you choose to live in your new build home for 10-15 years, you will not notice the drop in value. Instead, you can get excellent returns if the property demand and prices surge.
Like other financial investments, the property value can vary; it can go up or down. But if you focus on a long-term approach, you can time the resale right and avoid significant losses.
You should conduct your research to avoid losing the value of your new build property. Before selling yours, you can check the prices of similar older homes in Birmingham.
Also, don’t forget to check how much more expensive a new build is and how house prices have risen in the area over the years.
It isn’t as straightforward as it might seem to answer whether new builds lose value. Let’s understand why a newly built property in Birmingham loses value.
- If your new build is overpriced compared to other second-hand homes in Birmingham, then you won’t be able to get a higher price during the resale. Before investing in a new build property, you should thoroughly check other property prices.
- The new home is not of a good standard, and you are facing consistent issues with your maintenance. During your resale, it degrades the value of your home.
- The location of the new building isn’t as favourable as it used to be. If there are no noteworthy developments in your region over the years, the property value won’t increase.
- Overdevelopment in your area can also cause supply to outstrip demand, reducing your property rates and reducing your ROI of new build apartment investments.
- Because of factors like inflation, rising mortgage rates, etc., the housing market might be down, which can decrease the value of your new build property investment.
Because of these reasons, your new build property investment value can decrease by 7-10%.
So, are new builds worth it? Do new builds increase in value?
Yes, they are, but you consider multiple factors before purchasing new builds. Also, ensure consulting is a professional property investment provider for purchasing and selling new builds.
New Homes for Sale in Birmingham
Given that most new build house prices are higher than older homes, negotiate well with the property developers to get the best deals in Birmingham.
You should negotiate the price of a new build property at the start of the development when it is off-plan. However, you can also negotiate good deals at the end of the building project, but there are minimal instances that it might happen.
If you try to negotiate the price when only one or two properties are left, the project developer is keen to move these on at a reasonable price so they can move on to the next project.
To negotiate the price and avoid the loss in value of a new build property, you must have substantial knowledge of the Birmingham area and the value of similar second-hand properties.
Here are methods you can follow to avoid a new build house from losing value:
- Assess the local housing market prices and current scenario
- Research the developer or the construction company
- Go through an in-depth inspection for better clarity of the upcoming new build home
- Ensure there is a new home warranty to avoid different hassles
- Choose your location wisely and perform a thorough research
- Consult the best property management company.
We at Pluxa Property offer great offers for new-build properties and ensure you invest in the best properties which can deliver you the best ROI.
With years of experience providing excellent deals for new-build properties, we have a great network in the United Kingdom to help land your ideal newly built home.
Contact our support team and get the best deals on new development properties.
FAQs
Why are so many houses being built in the UK?
Housing programmes delivered by Homes England witnessed an overall increase in starts and completions of new build homes in the United Kingdom in 2021-22. According to reports, last year, there were 38,437 new homes started on-site and 37,165 houses completed between 1 March 2021 and 31 March 2022.
Why do all UK houses look the same?
Because homes today are being built to reduce energy costs, withstand harsher climates, and comply with more stringent building codes. Multiple developers of modern homes use a similar design strategy because they know it complies with local building requirements. It has resulted in most of the newly built UK houses looking similar.
Peter Juhasz is the founder of Pluxa Property, the biggest property investment company in UK and Group CEO of AIP Capital Group and a property investment expert with over a decade of experience in the UK market.
He built a successful property company using innovative cashflow strategies like Serviced Accommodation and HMOs, scaling to 200 units in four years.
Peter leads a team specializing in property and business acquisitions across various sectors. A former co-host of “Cashflow With Property,” he shares his expertise in real estate investing and business scaling.
He is committed to continuous learning and helping SME owners and investors maximize their returns, driven by his passion for empowering others to achieve their financial goals.
To learn how Pluxa Property can help you in UK property investment, contact our experts.
