Buying your first home or moving house is an exciting time. The decision to start afresh is often driven by wider and often exciting life changes. These include starting a new job, getting married, having children, downsizing or investing for your future.
Research by Savills estate agents in 2021 established that on average, people in England move home every 14 years. It therefore stands to reason that people looking to buy in the next few months will be calling their next property ‘home’ until 2036. Looking back at official land registry statistics over the last 14 years, house prices in the southeast have risen from an average £217,936 to £403,515; an increase of just over 85%. If this pattern were to continue (and we all know that over the medium to long term, house prices have only ever gone in one direction), the average house price in 2036 could be just under £750,000.
Some buyers in the market will try in vain to call the bottom of the market before they buy and try and sell at the top. But in reality, many such people tend to lose out. Ben Babington director of specialist new homes estate agent Trilogy Land & New Homes has been selling property for over 25 years and says “throughout my entire career, I have only ever known people regret not buying a property. I have seen too many people think about the short game in home ownership, only to find that they miss the boat and price themselves out of the market. The dotcom bubble, the financial crisis, Brexit and Covid were all meant to lead to stalling house prices and as we come out of the latter, I have every confidence that history will repeat itself”.
Looking at the current environment, unemployment is still at a historically low level and wage growth is strong, combatting short-term inflationary pressures. Whilst interest rates have risen, they are still at very low levels compared the long-term average and they are expected to fall back once the Bank of England restrains price growth next year.
Ben’s advice is therefore to focus on finding the right house that will see you through the next 14 years and let historic growth patterns protect the value of your investment. He has set out his top five reasons why reserving a new home whilst under construction can be the sensible choice:
1. Record numbers of new homes were sold in 2021 and 2022 and the pipeline of new developments coming through planning and production is likely to be seriously constrained for the foreseeable future.
2. Reserving a new home early allows a purchaser to choose from a wider number of plots. The properties with the best attributes such as aspect, garden size and macro location tend be snapped up first.
3. Securing your home early can take some of the time pressures off to arrange and co-ordinate your move. Furthermore, buying from a developer marks the end of the chain and you know you always have a motivated seller who is not going to change their mind!
4. Reserving early can sometimes allow for a degree of personalisation that cannot be done later in the build programme. This might include choosing the kitchen cabinets, bathroom tiles or flooring throughout the home.
5. Developers may be willing to accept an early deal on the price, offer a helpful incentive or assist in some other way with your move. As long as their net price position is the same, most developers are happy to be creative with the structure of the deal.