27 November 2011, The Times
Many of us prefer period properties — but there are signs that the tide may be turning as buyers
… discover the hidden charms of new-builds – by Zoe Dare Hall
Proposals unveiled last week by the government to boost the housing market — including a scheme to help encourage the return of 95% mortgages — are, as ever, directed towards the new-build market, which is, at present, turning out less than half the number of properties required. So, does buying a new-build, rather than a Victorian or Edwardian home, make sense?
At the top of the market, in what estate agents refer to as “prime central London”, the answers appears to be yes. Camilla Dell, managing partner of the buying agency Black Brick, says that new-build properties priced at £5m or more command a 25% premium over their period equivalents, especially those offering large amounts of the lateral space that is so popular with well-heeled foreign buyers.
Across the country as a whole, however, the premium commanded by new-builds is a more modest 2.2%, according to Nationwide — down from 13.4% in 2000 — suggesting that, on average, those who bought a new home a decade ago won’t have done as well as someone who bought a period one. In the capital, the average price is 24% lower than for a comparable older property, Knight Frank estate agency has found.
Utility bills are likely to be lower in new-builds. Another advantage is ease of maintenance “In London and the southeast, where there is a greater heritage of well-built homes, there is an ‘old property premium’, and it has got higher over the past 35 years,” says Liam Bailey, head of residential research at Knight Frank. “Even though high-quality new-builds will sell for a premium, buyers tend to value aspirational period property more in the south. The key for developers is to deliver a product that they can demonstrate has the advantages of an older property — solid construction, character and staying power, so it doesn’t date.”
It’s the same story in the shires, where old properties are always the preference — and cost 15%-25% more than modern ones, according to Charles Birtles, director of the buying agency CB Property Search.
“People looking in the country want the chocolate box with the worn flagstones and aged beams,” he says. “Even pastiche new-builds can’t command the same price as period homes.”
In the north, by contrast, newly built properties tend to command a premium, in part because the housing stock tends to be of lower quality. Bailey says this trend reaches its height in the northwest, where average new-build prices are 15% higher than those for older properties.
And the sector may be about to see a wider spike in popularity, says Kate Faulkner, director of Designs on Property, an independent advice service. “Until 2008, I would never have recommended buying a new-build home, because of the premium they carried — and because so much was being built in city centres that prices weren’t sustainable,” she says. “Since then, the market has changed. We’re building 100,000 homes a year when we need 250,000, and I think new-build property might be a good investment.”
Utility bills are likely to be lower, too. “New-build homes should be a Grade A on the Energy Performance Certificate. Old homes are typically D or E,” Faulkner says. Another advantage is ease of maintenance. “Everything comes with a guarantee, and you shouldn’t have any repairs for five years.” New houses don’t have to be boring and samey, either.
The run-up to the year’s end could be a good time to haggle, with developers keener than usual to shift stock. That said, you should choose carefully. Although new homes don’t depreciate the moment you cross the threshold, in the way that, say, new cars do, older phases of properties on a development will typically be less attractive to buyers than the latest ones. If it’s a large block, always pick a property that has something the others don’t — the corner plot or an end of terrace. “And look at how easy it is to park,” Faulkner says.
Gary Patrick, a regional sales director for Barratt London, says the improved quality of build and facilities is broadening the appeal of new-build homes beyond first-time buyers to older downsizers, upgrading families and thirty- or fortysomething professionals wanting a more vibrant city-centre location.
“We are finding a much greater willingness in London to buy into new-build developments,” he says. “People are more aware of the advantages of homes built to higher energy standards, with modern specifications. Well-insulated homes are less expensive to run, and modern kitchens and bathrooms are pleasant to live with. These factors appeal across demographic boundaries.”
Laura White, 43, a fine-art lecturer, recently sold her period house in Stoke Newington, north London, and bought a three-bedroom flat for £385,000 with her boyfriend, Mark Wright, 49, also an art lecturer, in Barratt London’s Dalston Square, a development in Hackney.
“Dalston is young, fast-paced and bursting with creativity, and the sense of community is incredible,” White says. “We wanted a new-build flat because we saw it as an opportunity for a fresh project that we could decorate ourselves — something we felt restricted by with our previous homes because period houses often have so much character already.”
Who would have thought it: period homes with too much character? Maybe that will be the view of a new generation in love with their new-builds.