Should I be buying a new build property in the current market?
By Jo Eccles
Q. I am looking to buy a new build property but, in light of Brexit, I am not sure whether I should wait or not?
A: I tend to divide the London property market into two sections: the pure new build market and the period and re-sale market, as they operate quite differently and are exposed to different factors. At the moment we’re seeing a lot of uncertainty in the market which can be a good or a bad thing, depending on how you look at it.
Unlike the period re-sale market, the new build market is heavily reliant on demand from overseas investors, which is largely driven by market sentiment and our exchange rate. Currently, the pound is cheaper against other currencies which could make it attractive to overseas buyers. However, market sentiment is showing caution as there are concerns about oversupply of new build properties in London, especially in Prime Central London.
As a company, we are generally cautious about our clients investing in very large scale schemes; oversupply is a risk when you come to sell the property or rent it out as, chances are, there will be other near-identical properties on the market at the same time, competing with yours. That does not mean that you should avoid buying within a new development altogether; as long as you do your homework carefully, there are some excellent developments in London which can make for a great investment.
Additionally, in the current market a lot of developers will need to re-finance and many will have fewer finance options available to them, or are facing the possibility of down-valuations. As such, many will be keen to sell and be open to negotiation. Do remember that you can often negotiate harder with a developer rather than an individual seller, as developers tend to be much more commercial about the transaction and relations are therefore less likely to break down if you do negotiate the price.
There is the possibility that prices of new build properties may fall over the coming months and a lot of buyers are putting their purchasing plans on hold for the short term, while they wait for the Brexit and political dust to settle. So, if you do your sums right, you may well be able to secure a reduced price property now, as there is less competition and, again, developers are likely to be more open to lower offers.
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