According to the latest Price Paid Data, only 9,013 new build property sales were registered with HM Land Registry in September 2017 – a 21.6% fall on the same period last year.
It’s possible that house hunters are being scared away by sensationalist stories in the press; however, with housing stock at near record lows, there simply aren’t enough new builds to buy. Either way, housebuilders clearly have some work to do.
“Most people want to buy an existing home, one that is 20 years or more old, with all the latest news stories around the quality of new homes, potential purchasers or renters are shying away from new homes because they are concerned about quality,” said Gwyn Roberts, Lead at the Home Quality Mark. “Housebuilders only build what they can sell, if the market isn’t there – then they won’t build.”
In contrast, the National New Homes Satisfaction Survey indicates that over 90% of new build buyers would buy a new build again. It seems housebuilders may have some work to do in marketing the benefits of new build properties.
“Consumers need to have more confidence that the new homes they are planning to buy or rent are better quality,” said Roberts. “That the home will have lower energy bills, limited maintenance and generally be good for their health and wellbeing and that it will be completed to a good quality.”
There is also the simple fact that there are not enough new homes to buy. Jason Tebb, Chief Operations Officer of Go Develop, points out that economic uncertainty will continue to slow the delivery of new stock.
“With ongoing uncertainty over Brexit negotiations combined with higher than expected public spending, despite years of supposed ‘austerity’, banks and institutions are taking a more cautious view on lending to what is seen as higher risk development projects, albeit that the perceived risk is not perhaps the actual product, more the size of developer,” said Tebb.
This means that SMEs, who are key to delivering more houses and driving up sales, are financially crippled. “Whilst volume housebuilders already have a significant land bank and pre-agreed institutional funds, this outlook significantly impacts small to medium sized builders,” said Tebb. “Many SMEs rely solely on banks for development finance to support their business. These developers are increasingly having to seek alternative sources of finance to fund their projects and with this cautious approach by mainstream lenders is set to continue for the foreseeable future.”
“Improving the public perception of new homes, driving up standards, encouraging new ways of building homes are the only way that the numbers of homes that we require are going to be delivered,” added Roberts.
Of the 97,102 sales received for registration by HMLR in September 2017, 72,519 were freehold, a 3.2% increase on September 2016.