The number of sales agreed for new build homes has dropped by 21% to 26,724 compared with 33,666 in 2019, according to research by TwentyCi has found.
The data analytics company found this was in direct contrast with the number of sales agreed among resale properties which are now 6% higher at 842,371 than five years ago in 2019 at 795,050.
The lower number of new-build agreed sales is unrelated to supply because the volume of these instructions in the market has risen by 65% in the last year, which has led TwentyCi to conclude that the price premium of new builds is behind the reduction in demand.
Mark Goodrich, head of AVM and developer sales at TwentyCi, said: “Our data reveals a very contrasting market between the demand for new-build and resale properties. The sales agreed figure has risen for both since last year but the picture is very different compared to 2019 with demand now 21% lower for new builds but 6% higher for resale homes.
“Supply is not the issue so we conclude the new build price premium is the key driver. On average, homebuyers are expected to pay 17% more for new build properties which is quite a high premium. Over the last three months for example, the UK average asking price was £497,939 for a new build and £425,130 for an existing property. That’s a value of around £72,800 more for a brand new home, money which could instead help boost the value of a resale home with home improvements or renovations.
“Buyers’ affordability has been heavily impacted by interest rate rises and the removal of schemes such as Help to Buy in recent years. Both of these factors mean new builds will be assessed by buyers very differently now compared with 2019.
“From 1 April 2025, Stamp Duty will revert to the pre-September 2022 levels meaning that the 0% threshold is back to £300,000 for first time buyers from its current threshold of £425,000. It will be interesting to see if developers choose to incentivise first time buyers after this date.”
