With so much uncertainty surrounding the housing market, many people are wondering what the future holds for new build properties in 2023.
Will house prices go up or down? And if they do go down, by how much?
Here we take a look at the various predictions for new build property prices and assess what homeowners need to watch out for.
What is a new build home?
A new build home is a property that has been newly constructed – as opposed to buying an existing property. They come in a variety of different types, from terraced houses and semi-detached properties to apartments and bungalows.
What is currently happening in the property market?
At the moment, the UK property market is fairly subdued. This is largely due to the impact that the September Mini Budget has had on the financial markets.
Despite this, consumer sentiment has improved in recent months, so there are signs of hope for homeowners looking to invest in new build properties.
What is the current market for new build properties?
The value of property in the UK correlates with the number of new homes being built.
The average cost of a new build house in the UK (May 2022) is £358,543.
In 2017, the government set a target of 300,000 new homes per year. However, in recent years not enough homes have been built and this has led to a housing crisis.
According to Sky News, in the decade to 2021, the population grew faster or at the same pace as the number of homes in 150 of the 309 local authorities.
Housebuilders have struggled to keep pace with the rising demand for housing because of stringent regulatory compliance measures and a shortage of both materials and skilled workers.
This has led to a situation in England where only 1% of residential properties are vacant. This is a much smaller number than the rest of Europe, including Germany, where the rate is 8.2%.
New build properties have the ability to go into ‘survival mode’ during a turbulent economy.
Negotiation tools can consist of stamp duty paid, mortgage payments for a specific timeframe, discounts on the property, utility bills or service charges paid for limited time and government schemes.
It is also the case that often the developers have to sell, so there is a will to achieve the end result rather than if the vendor on an established property decides against selling if they do not achieve the price they require to move on themselves.
What will happen to the price of new build properties in 2023?
When it comes to new build properties, house prices have been on a steady incline in recent years. This is mainly due to the fact that there is an insufficient number of new homes being built to meet demand.
However, due to the economic uncertainty caused by the pandemic and Brexit, experts are predicting a slowdown in house price growth in 2023. This could be particularly true for new build properties as they often come with much higher prices than existing builds.
The September Mini Budget prompted a house price forecast of a drop by a whopping 20%. But housing market predictions in the UK have since become less dramatic.
Lloyds Bank has forecast that house prices will fall by 8% in 2023, Zoopla expects it to be up to 5%, property consultancy company JLL believes a 6% drop is likely, and housing expert and buying agent Henry Pryor predicts a 10% drop by the end of 2023.
Considering these forecasts, should we be expecting a house price crash in the UK? HomeOwners Alliance CEO Paula Higgins says that although it’s understandable for people to be worried about such predictions, she believes this is more likely to be a correction than a crash.
She believes that the affordability tests introduced after the 2008 financial crash mean people should be better placed to cope with increased costs than they would have been otherwise. However, she also encourages homeowners to frequently check they’re on the best mortgage rate and recommends using a fee-free mortgage broker to do the hard work for them.
So, what can we expect to happen with new build property prices in 2023? It won’t be a walk in the park for many homeowners and buyers, but it is unlikely that there will be a crash as such.
Ultimately, it all depends on how well the UK economy recovers from the pandemic – if it does indeed recover. Until then, homeowners should exercise caution and make sure they are aware of the market to stay one step ahead.
What does the new build property market mean for property investors in 2023?
The new build property market has opportunities for investors in 2023.
Due to the scarcity of houses being built, these properties carry value. The property market has increased in value in the UK gradually over time. Any stalling in house price value is eradicated as time passes.
As property demand continues to increase and supply does not rise by the same amount, the price of properties will continue to rise.
Touchstone Education founder Paul Smith said: “The average price of UK properties has risen drastically since the turn of the millennium. The lack of housing supply means that this house price value growth will continue in future years.
“New build are at the forefront of UK housing supply and are designed to meet modern standards, so are ideal for homeowners, tenants and guests.”
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