Which is best to buy - Existing or New Build?

According to the National House Building Council (NHBC), more than 14,400 new homes were registered to be built in the East Midlands last year, an increase of 18.7% on 2016 levels of 12,200 dwellings. Great news when you consider it is one of the highest number of new builds in the region since the pre-recession levels of the Credit Crunch and the uncertainty of Brexit and the General Election.

 So, why is it that often a new build property is a lot more expensive compared to an existing property of similar type, accommodation, location and structure?

 You might believe that the difference between purchasing a new build home against purchasing a second-hand/existing home is just individual preference. Some buyers (and indeed tenants) like the trendy modern feel of a new home, whilst others like a home that has stood the test of time.

Statistics show there IS a real difference in the Rutland Property Market when it comes to new versus existing homes and the prices paid.

The following graph shows the average price paid for an existing property versus a brand new home since 1996, and it makes interesting reading.

 Yet possibly nothing is ever that easy, as there are issues with these statistics.

The overall average for the whole Rutland County Council area for the ‘new build premium’ (new build premium being the additional price a buyer pays for buying a new property compared to a second-hand one) over the last 21 years has only been -0.76% (although these have ranged between 43.6% in 2002 and as low as -28.4% in 2012). These statistics actually show that it is problematic to compare like with like because it is impossible to completely separate all the different factors of type, accommodation, location and structure etc.

For a fair comparison, a mirror image or duplicate of the existing home would need building adjacent to the existing property, and then calculate which homebuyers or buy-to-let landlords would pay more for! Perhaps if everything was the same (all things being equal), there might not be any difference in what buyers would be prepared to pay, but then again, it’s like new cars versus second-hand cars - there is always a difference on the forecourt, because things are never wholly equal.

What I do know is that my statistics of the Oakham property market show that new build apartments are worth more to people than their second-hand equivalents, whilst the difference is negligible between new build Oakham detached houses and second-hand Oakham detached houses.

However, I believe the really important lesson in all these statistics is the fact that ‘new build premium’ for new-build versus buying a second-hand property, was higher in the boom years of the mid 1990’s and early 2000’s.

So, if you want to buy new (which has both advantages and disadvantages) and the only consideration is money … as you can see, now might be a better time to buy new.