Three in five new homes, some 60%, in London are now sold before they are built, according to a report from real estate firm CBRE. Pre-completion sales, often referred to as off plan, rates are even higher in certain boroughs, such as the City where it is 84% and Newham where it is 97%.
‘This growing demand for high quality new build homes across the capital demonstrates that the domestic buyer is starting to play a more prominent role in the market,’ said Mark Collins, chairman of residential at CBRE. ‘Whether it is first time buyers looking to get their foot on the property ladder with smaller deposits, or down sizers looking to maximise the return on their investment, the perception of purchasing a home off plan has never been as popular as it is today,’ he explained.
‘The high number of units now sold and under construction also reflects the substantial confidence from buyers which has ultimately encouraged London’s house builders to bring forward their development launch dates,’ he added.
The firm also report that prime central London values have grown by 4.2% in the second quarter of 2013. This rapid growth in values comes at the same time as news that pre-completion sales across the capital have reached record levels. ‘The underlying demand for new build development has resulted in a price growth which exceeds that of the wider market, with an average of London new build values increasing by 4.7% since the last quarter of 2012,’ said Collins.
Quote from PropertyForum.com : “As the football season gets underway the UK annual research into the price of properties close to Premier League grounds shows that they have increased by 135% over the past decade.”
The firm advises purchasers buying off plan to research the company behind the development and if possible look at previous developments which will help you to gauge the quality of build and performance of the company to date. Many developments under construction will offer a sales and marketing suite or an information centre. The purpose of this is to allow prospective purchasers to gain an insight into the quality and scale of the private and communal spaces within the development.
Regular trips to the development site and sales and marketing suite to establish progress, discuss any updates and also to gain a feel for the area as your home is being built is also a good idea. It is also important to research the growth potential of the area, and evaluate the potential return you could make in one to five years. CBRE produces regular reports on local markets and this will help to establish forecasted growth in return or yields.
It is also worth asking if there is a chance to choose the design. Many developers offer a selection of interior styles and fittings if purchased off plan, therefore there may be an opportunity to tailor the finish to a way that suits you. The firm also advises off plan buyers to think ahead and look into which other building work is planned for the immediate and surrounding area. It is key to ensure that you know exactly what other applications are listed which could impact positively or negatively for your lifestyle. It says to always make sure you have confirmation as to whether the property is covered as part of the NHBC scheme or a similar agreement. This will help to ensure you are fully aware of the projected energy performance rating along with receipt of a formal energy performance certificate.
It is wise to establish whether the development will be managed by an agent and if so by whom. If you can, speak to current residents of the development to discuss any problems they may have experienced and to establish the level of customer care. It is also advisable to confirm whether or not you will be paying a service charge and if so what the charges will cover.