Property: It's brand new, but is it necessarily better?

Developers offer a variety of temptations to be the first owner of a newly-built home, but you will often pay a premium price. Assess each deal on its merits, says Robert Liebman

FOR THE privilege of obtainingpristine new homes, buyers generally pay a premium - usually between 5 and 15 per cent more than the price of second-hand properties. What exactly does the extra money buy? And what is the pay-off when the homeowner sells?

New homes vary considerably in quality and value according to the developer, contractor, incentives and various market forces.

By definition, they boast the latest technology and, whether in 1998 or 1978, by and large they mean less maintenance and making good the mistakes and omissions of previous owners. But the best of today's new builds go beyond technological advances to satisfy owners to a degree that is probably unprecedented. Appliances will not only be new but are likely to be built in. Most homeowners will be able to select in advance things such as the colour and quality of carpets and tiles, and the placement of some interior walls.

Whether urban or suburban, new homes offer high levels of security, which also means that roads on new estates are planned to be safer for children, according to Colin Gabb, managing director of Bryant Homes South.

Developers didn't always listen so attentively to customers. Why the change? "The first day of the last recession forced developers to rethink their product, to give value for money," says Paul Vallone, sales and marketing director for Berkeley. To meet customer expectations, builders such as Laing and Bryant imported ideas from elsewhere, notably America.

The Yankee influence is immediately evident in Laing homes in Cuffley, Hertfordshire, which boast enormous basement rooms. Laing, Bryant and a few other developers also build "bonus rooms" - rooms in the loft space. Such refinements increase the property's value for developer and homeowner alike.

But already poor-quality conversions and waterside properties have appeared, built by developers out to make a quick trendy buck. "By and large new houses have pinched rooms, smaller and lower than older properties. They are not built very well," says Malcolm Hollis, a chartered surveyor who advised Granada TV on the recent Builders from Hell programme.

A builder can be merely unscrupulous rather than downright diabolical to cause misery. Five years after Helen and James bought their new home on an estate in the North, Helen is still annoyed that they can't extend the garage and build a bedroom over the extension. "Our surveyor found that the houses were too near one another and our builder had laid the pipes too near the surface. We wasted pounds 600 on plans and a survey."

This builder was conserving space. Many contractors indulge in what Mr Hollis calls "spec-saving" - using cheaper, inferior products than were agreed on.

Some new cars are lemons, and all new cars plummet in value the moment they leave the showroom. Similarly with homes, but owners of new properties have the extra worry that, if you are on an estate where other homes are still being built, your short-term value drops even further.

When the dust literally settles, your one-careful-owner home enters the lists like any other second-hand property. "Once you've lived in it, then obviously for the next buyer it's no longer new, but the fundamental point is that its price will still be rising. The depreciation depends on local conditions and is likely to be overwhelmed by the fact that prices are rising in any case," says Paul Sanderson, Nationwide's head of research.

According to Halifax statistics, prices for existing homes have steadily inched up over the last year, whereas average prices for new houses were all over the place. In May 1997 they declined 2 per cent, but last May they rose 11.7 per cent. This seemingly magnificent leap is meaningless. The monthly statistical sample for new homes in particular is small, volatile and unreliable.

"The normal pattern is for new houses to be between 5 and 15 per cent above the price for existing houses," says Gary Marsh, head of group corporate affairs for Halifax. "When times are problematical, builders cut their prices to get the cash flow going. The gap now is very narrow, so over the next year or two expect new house prices to rise by slightly more than existing houses to restore those more normal differentials."

What does this mean for someone today choosing between two hypothetically equal houses - one new, one second-hand - and wondering about the prices each might command five or fifteen years from now?

"I honestly don't think you could say that one would be better than the other. The movement in percentages would be so close as to be indistinguishable," Mr Marsh concludes.

Nationwide's Mr Sanderson concurs: "More important than the statistics are the specifics for any particular housebuyer, the local factors, such as the actual position of new developments, and the schools, roads and shops. Many of these factors determine the price performance of any one area.

"Quite often the differences between areas in the same region can be greater than between two regions. Local conditions really dominate," he adds.

From another quarter, Richard Cotton emphasises differences between developers who build to different qualities. "We can identify who we would, and who we would not, buy from," he says. Mr Cotton is a partner at Cluttons Daniel Smith in charge of their London residential agency.

Ordinary buyers can also decide who to buy from. Mr Hollis says: "If I were buying a new home, I would ask others already on the estate about their homes. If I were the first, I would spend whatever was required on surveys and inspections to obtain reliable information."

Have you tried new the Independent Digital Edition apps?
Life and Style
ebookNow available in paperback
ebooks
ebookA delicious collection of 50 meaty main courses
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Recruitment Genius: Home Care / Support Workers

    £7 - £10 per hour: Recruitment Genius: This care provider is looking for Home ...

    Recruitment Genius: Web Team Leader

    £30000 - £35000 per annum: Recruitment Genius: One of the UK's leading web des...

    Recruitment Genius: Client Manager

    £27000 - £35000 per annum: Recruitment Genius: A growing, successful, friendly...

    Recruitment Genius: Property Negotiator - OTE £20,000+

    £16000 - £25000 per annum: Recruitment Genius: This family owned, independent ...

    Day In a Page

    Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

    Greece referendum

    Greeks say 'No' to austerity and plunge Europe into crisis
    Ten years after the 7/7 terror attacks, is Britain an altered state?

    7/7 bombings anniversary

    Ten years after the terror attacks, is Britain an altered state?
    Beautiful evening dresses are some of the loveliest Donatella has created

    Versace haute couture review

    Beautiful evening dresses are some of the loveliest Donatella has ever created
    No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

    No hope and no jobs in Gaza

    So the young risk their lives and run for it
    Fashion apps: Retailers roll together shopping and social networking for mobile customers

    Fashion apps

    Retailers roll together shopping and social networking for mobile customers
    The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

    Gaping hole at the heart of the European Union

    Treatment of Greece has shown up a lack of genuine legitimacy
    Number of young homeless in Britain 'more than three times the official figures'

    'Everything changed when I went to the hostel'

    Number of young homeless people in Britain is 'more than three times the official figures'
    Compton Cricket Club

    Compton Cricket Club

    Portraits of LA cricketers from notorious suburb to be displayed in London
    London now the global money-laundering centre for the drug trade, says crime expert

    Wlecome to London, drug money-laundering centre for the world

    'Mexico is its heart and London is its head'
    The Buddhist temple minutes from Centre Court that helps a winner keep on winning

    The Buddhist temple minutes from Centre Court

    It helps a winner keep on winning
    Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

    Is this the future of flying?

    Battery-powered planes made of plastic, and without flight decks
    Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

    Isis are barbarians

    but the Caliphate is an ancient Muslim ideal
    The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

    Curse of Brink's Mat strikes again

    Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
    Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

    'The ministers talk to us about miracles'

    Why Greeks are cynical ahead of the bailout referendum
    Call of the wild: How science is learning to decode the way animals communicate

    Call of the wild

    How science is learning to decode the way animals communicate