Why are New-Builds In Such High Demand?
The pandemic presented the construction industry with many challenges resulting from national lockdowns and strict social distancing guidelines. With many UK building sites closing in early 2020, the supply of new build properties fell significantly over the past 12 months. In fact, Data suggests as many as 42% of residential construction sites had to shut down by the first week of April.
Whilst 255,000 new homes were built before the shutting down of most building activity, the demand for these properties has continued to outweigh the supply. During the current pre and post-lockdown boom, the demand for new builds has surged seeing demand outweighing supply.
Why are New-Builds In Such High Demand?
Good quality new-builds have always been sought after by both homebuyers and property investors and this trend has shown no sign of subsiding. Recent data reveals that 38.7% of all new-build properties are already sold subject to contract or at least under offer, a 9% rise from the same time in 2020.
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A Growing Trend In New-Builds.
The UK housing market is performing very strongly with a record level of demand. The stamp duty holiday, the gradual easing of lockdown restrictions, increased mortgage availability and low interest rates are sustaining the property market across the board and more buyers and investors than ever are looking to purchase new-builds.
With such a strong demand, there is growing confidence surrounding the UK’s homebuilding sector, which has remained remarkably resilient considering, so far as to say housebuilders are struggling to keep up with this increasing demand.
The UK government continues to set a goal of creating 300,000 now homes a year by the mid 2020s [parliament.uk]. They are also looking to further improve the green standards of new-builds which will bring forward more quality homes in the future and support the sector in keeping up with the growing demand.
Why Should I Buy A New Build Property?
New build homes are a great option for almost anyone, whether a first time buyer or a growing family. There are also a few common problems many new build buyers aren’t prepared for.
Here are the most common benefits of buying a new-build home.
New build homes are popular for many reasons:
- You will be the first to live in the property meaning nobody else’s tastes and alterations to live with
- Repairs and redecoration should not be an issue for a while
- You can specify a certain finish, select fixtures and fittings and tailor the property to your taste
- New properties come with guarantees; NHBC offers a 10-year warranty. This includes a two-year builder warranty and then an eight-year insurance agreement.
- Other companies provide warranties and insurance for new homes, such as the BLP housing warranty insurance
- If the property is built to the correct standard, you can enjoy lower running costs and energy bills
- There is no Chain
- With the latest environmental standards, including better insulation and more efficient heating systems, new-builds are greener properties. The majority have an A or B energy performance rating which are substantially cheaper to run.
- New-builds are far more appealing to tenants compared to older, tired properties. The high environmental standards and lower bills provide additional benefits. This makes this kind of property ideal for buy-to-let investment.
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Who Is Driving The Demand For New Build Homes?
Off plan properties appeal to many different people for many different reasons and with the Stamp Duty holiday making the process of buying a property more affordable, the growth in demand was inevitable. Multiple government schemes are also now in place such as the new help to buy scheme, surrounding new build homes. These schemes aim to make getting on the property ladder easier, especially for the younger generation.
Younger individuals remain a strong demographic of buyers; the Help-to-Buy scheme offers an additional 25% towards the buyer’s deposit, so it is no surprise that younger people (between 25 and 34) made up 41% of homeowners in 2019-2020. 56% of those aged 35-44 were also owner-occupiers during this time period, highlighting the strength of the government’s incentives. [figures from Zoopla]
As well as the financial benefits of off-plan properties, new builds also provide the luxury of time, with no chains meaning a speedy, uncomplicated transaction. Purchasing off-plan properties also provides the opportunity to customise certain features such as bathrooms and windows.
With Covid-19 being reliant on people and surfaces to continue spreading, this luxury has been a contributing factor to the popularity of new builds over the past 12 months, according to Rightmove.
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Post Covid New-Build House Sales
New home reservations continued virtually during lockdown. The ending of restrictions allowed property viewings from May 13 2021 has kick-started sales in both the new and existing market, giving even more confidence to builders.
Builders are back to delivering homes faster. In fact, the number of new homes completed increased significantly from April and May 2021, reaching 79% and 97% of pre-Covid levels in June and July. Net reservations for new homes improved too with a net balance of 33% of housebuilders reported more sales in August compared with the same time last year, up from a balance of -79 per cent in April [Home Builders Federation].