New Build Properties Continue to Increase in Demand
During the initial stages of the lockdown, we noticed a decline in the number of new-build properties. This is primarily due to the restrictions in place to stop the spread of COVID19. Delays in shipping combined with workers placed on furlough resulted in construction work coming to a halt.
Furthermore, as less materials were reaching construction sites, fewer projects were able to make progress. Nevertheless, as the vaccine programme was implemented throughout the UK, more workers were able to return to sites to complete construction. Therefore, the completion of new builds in Q3 and Q4 bounced back strongly.
Q1 2021: Increase in New Builds Registered
Progress continues to be made in the construction sector. This directly correlates with the increasing number of new build properties registered in Q1 2021. Around 36,863 new homes were built during the first quarter of this year. The property market is bouncing back strongly from the short-term setback. In comparison to the same period last year, the number of new builds grew by 10%. However, despite the growth, the figures fall well below the government’s objective. Initially the government was aiming to build 300,000 homes each year by mid-2020.
Why are property investors attracted to new build developments?
A chain-free property
There are no previous owners, therefore investors can buy directly from the developer. Therefore, the process is much smoother and more efficient. Property chains can be quite frustrating. The chain process links buyers and sellers through their purchases and the success of purchase is dependent on many factors. If one person changes their mind, the whole chain could potentially collapse. In new build properties, investors are at ease knowing there is no uncertainty or risk of a chain collapsing. Hence ensuring a quick and secure purchase.
Lower purchase price
The developments are much cheaper to purchase during the earlier stages of the development. An off-plan development is purchased prior to or during construction. As a result, investors can secure the development at a lower price point. The value of the property will increase after completion and will continue to grow depending on the capital growth of the city.
Contemporary design and new appliances
New build properties feature modern décor and benefit with the installations of brand new appliances. Therefore, eliminating the need to refurbish and renovate spaces. As opposed to period properties, which would require a great deal of maintenance. The developments also tend to be much more stylish, attracting a great deal of tenants.
Eco-friendly builds are cheaper to run and maintain. For instance, in new builds, investors do not need to worry about any outdated elements such as the electrics, kitchens, and bathrooms. Although these issues are amendable in older properties, they will add to the costs. Furthermore, any outstanding issues will prolong the process before a tenant can move into the property. These developments are also designed with innovative materials and practical solutions.
Each development also requires an Energy Performance Certificate. This will indicate how energy efficient a development is. A higher EPC rating means your property is very energy efficient, therefore, implies low energy costs. Unsurprisingly, over 95% of new build have a high EPC rating, thus attracting numerous investors.
A safer build with a 10-year warranty
New build properties must adhere to strict building regulations, which are much more reliable and safer. Almost all new builds come with a 10-year warranty.
Pick desirable units
Property investors have more flexibility when choosing an apartment in a new build. Investors can select their preferred units on a first come first serve basis. Taking into consideration the unit size they would like to purchase and which floor the apartment is situated on. Alongside this, investors can also choose a unit with the best view.
What factors can boost the potential value of off-plan property investments?
- Location: Are there local amenities in the area? Are plans in the pipeline to expand the range of amenities in the area?
- Employment rate: Are there many job opportunities in the area? If there are more job prospects in the area, this will attract more professional and skilled workers into the area. Therefore, boosting the demand for properties in the area.
- Transportation: Is this development located in a well-connected area? Consider the surrounding network, including bus, rail and road links. Properties with high rental demand are normally found in commuter hubs.
- Regeneration: Cities and town undergoing regeneration schemes are key investor hotspots. Regeneration projects boost the value of properties over time as the economy strengthens in the area.
The UK housing market is becoming increasingly expensive because of the long-term and persistent undersupply of housing. The rate of progression of new build construction will soften the steep dip in the lack of housing stock. You may have noticed new build developments are often more expensive than other properties. With the stamp duty savings, buyers can now consider these costly properties that they may have not been able to do before. For this reason, demand for new builds has soared.
If you are looking to invest in your first off-plan property, at CityRise we can assure you off-plan properties and new builds are a great long-term investment opportunity. An investment that will increase in value by the time it is completed.
Off-plan properties are always in high demand because they are extremely desirable for buyers and tenants. Renters are often attracted by the new stylish and contemporary interiors. The high-quality developments are often furnished with new appliances. A high percentage of investors are looking to acquire new build developments, purely because of their appeal to the buyers in the market. If you are looking to expand your property portfolio or dive into the world of property investment, get in touch with one of our experienced investment consultants today.