Investor squeeze sees off-plan sales plummet

Investor squeeze sees off-plan sales plummet

0:07 AM, 25th May 2023, About A year ago 3

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Off-plan sales for new homes have continued to plummet as property investors avoid buying, research reveals.

Real estate firm Hamptons says that just 34% of new homes in England and Wales were sold in advance of completion last year.

That’s the lowest level since 2013 and just one in five of those sales was to an investor.

The firm says that numbers have fallen from a peak of 46% in 2016, to just 34% last year.

‘New houses are now more likely to be sold off-plan’

Hampton’s lead analyst, David Fell, said: “Smaller new houses are now more likely to be sold off-plan than flats.

“This reflects Covid-induced changes alongside a shift in who is willing to buy before a new home is completed.

“Off-plan demand has steadily moved away from investors buying two or three years in advance towards first-time buyers who are typically looking to move home within 6-12 months.

“The majority, however, still want to wait to see a finished product.”

Off-plan buyers are now mostly owner-occupiers

Hamptons says that off-plan buyers are now mostly owner-occupiers, with just 21% of purchases made by investors last year.

This massive shift has caused terraced houses to become the new off-plan stars, overtaking flats for the first time since 2007.

And the North West has become the off-plan capital of the country, with 45% of new homes sold off-plan.

Buy-to-let investors are still in the market, seeking higher yields despite the overall decline in investor interest.

This is the fifth time in the past six years that off-plan sales have fallen.

‘Rates of price growth have reduced the incentive for some buyers’

Mr Fell said: “Slowing rates of price growth have also reduced the incentive for some buyers to get in early.

“A decade ago, investors buying well in advance of completion often saw the value of their new home rise 20-40% between exchange and completion.

“But as price growth has slowed, buyers have in general become less willing to commit to purchases years in advance of completion.”

He added: “Overall, the continued slowdown in the number of new homes sold off-plan coupled with the end of Help to Buy is hitting most housebuilder’s bottom lines.

“Slowing sales rates mean that some developers are slowing down the pace of work in order to reduce their risk.”

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15:22 PM, 25th May 2023, About A year ago

All I can say is that if you buy off plan you must be a complete numpty. The quality of new homes now is far below that of those built 20 odd years ago. Yes, they may be more thermaly efficient but the shoddy build offsets this and you could end up spending a lot of time chasing the builder who won't be interested any longer as he has already cashed your cheque.

Reluctant Landlord

16:44 PM, 25th May 2023, About A year ago

buying a new build even when it exists is another minefield...with building control signed off by their own inspectors.....says it all.

Ian Narbeth

17:07 PM, 25th May 2023, About A year ago

I agree with the above points. In addition if you need a mortgage, it is risky to buy off plan because the developer will normally require you to complete within say a maximum of 28 days after notice of completion. If you have not been kept up to date with progress then you have very little time to sort out the mortgage which nowadays takes a lot longer than it used to. You risk losing the deposit and being in breach of contract.

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