Have we lost the New Homes Premium?
Matthew Hollywood BSc Hon - Principal Consultant
The Land and New Homes Organisation - Providing Land & New Homes support and marketing advice to landowners and property professionals in the South East of England
If you had asked me 5 years ago ' - ' the answer would have been an instant and resounding 15%. Buyers were happy to pay a premium for a Brand New home beautifully designed, meticulously finished and with the protection of a comprehensive warranty. Now I am not so confident.
However the reason for this shift is multi-layered. And whilst there is still a premium; it has been eroded by consumer confidence, choice and cost savings.
The New Homes industry has, to be frank, taken a bit of a battering recently with issues of quality and after-care. And when you introduce warranties with exclusions or restrictions to this scenario (albeit normally on Newly Created New Homes rather than Brand New builds) it is easy to see why some buyers steer clear of new builds - or at least questions the premium price. We need to rebuild consumer confidence and deliver homes that buyers want to buy, with the confidence that they are buying a quality product.
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Choice has a huge impact on this New Homes Premium, and whilst not strictly related to the premium buyers are prepared to pay; if you give consumers choice, over near identical products, they will find the best deal. And this choice can come from the second-hand market where owners have created a beautiful home or other New Homes sites in the area. I would even go as far to say that on large strategic sites, where multiple house-builders are competing for limited demand that values can fall below existing house values - controversial I appreciate.
Delivering an exciting product, well designed with a quality specification has always been the desire of many developers. And in fairness is probably the bedrock for achieving a New Homes premium. But the reality's of inflationary build costs, borrowing and tighter margins can have a negative impact on this desire.
So perhaps we need to go back to the adage of the 'customer journey'; something that has been given less importance to recently. However, 'build and they will buy' is no longer a fact for many developers - and certainly not for a premium price.
Founder at Silver Key Group Ltd and Creator / Owner at poker-golf
1 年Self and custom building is the answer. The buyer then gets what they want and how they want it. This is why many European countries have over 50% of all new homes as CSB homes.