Demand is increasing for new-builds among investors and homebuyers

With strong buyer demand in the UK housing market, demand is also high for new-builds. What is behind this growing trend?

Good quality new-builds are increasingly sought after. Both homebuyers and property investors are becoming more and more interested in new-build properties. Recent data from BuildScan, a snagging and defect management app, has revealed that 38.7% of all new-build properties are already sold subject to contract or under offer. This is a 9% rise from the same time in 2020.

Harry Yates, founder and managing director of BuildScan, says: “A number of current market indicators suggest that the new build sector is really helping to fuel the current housing boom, with both transaction numbers and house price growth showing a sharp uplift over the last year.

“This is also clear when analysing buyer demand for new build housing with all but a handful of major cities seeing a notable leap in market activity.”

A growing trend for new-build homes

The UK housing market is performing particularly strongly with a record level of demand. The stamp duty holiday, lifting of lockdown restrictions, increased mortgage availability and low interest rates are causing a boom in the property market across the board. And more buyers and investors are looking to purchase new-builds.

Harry Yates comments: “Although a degree of this demand is due to the current stamp duty holiday, it’s not unusual to see the appetite for new build homes sit consistently higher than that of the regular market.

“We expect this will continue to be the case and as housebuilders struggle to keep pace with this high level of demand, prices are likely to keep climbing too.”

With such a strong appetite for new-builds, there is growing confidence in the UK’s housebuilding sector. Housebuilding has remained remarkably resilient as the delivery of new-builds is on the rise. But housebuilders are struggling to keep up with this increasing demand.

The UK government is continuing to target a goal of delivering 300,000 homes a year by the mid 2020s. Additionally, the government is looking to further improve green standards of new-builds. This will bring forward more quality new-builds moving forward and will help the sector keep up with the growing demand.

Benefits of buying new-build

New-builds are appealing for homebuyers, tenants and property investors for a number of reasons. When buying a property before it’s been built, known as off-plan, developers often offer incentives, including discounts. Additionally, if you invest before or during the building phase, you may even be able to customise the decor, appliances and layouts.

Some buyers and investors may also find buying a new-build appealing as there is no chain. When buying an existing property, there is usually a chain above you, which can slow things down and add stress. There is also peace of mind with new-build homes as they come with an NHBC (or equivalent) 10-year warranty. This includes a two-year builder warranty and then an eight-year insurance agreement.

With the latest environmental standards, including better insulation and more efficient heating systems, new-builds are greener properties. The majority of new-builds have an A or B energy performance rating and are substantially cheaper to run.

New-builds are much more appealing to tenants compared to older, tired properties. They won’t have to worry about issues such as condensation, damp or unreliable boilers and old heating systems. 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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