Why new build properties are distorting the Spennymoor property market

There are still 41 new build properties showing on Rightmove for the Spennymoor area.

From this at £441,500

Whitworth Road, Spennymoor, DL16 7LN

http://www.rightmove.co.uk/new-homes-for-sale/property-24192879.html

To this at £89,995

Coulson Street, Spennymoor, DL16

http://www.rightmove.co.uk/new-homes-for-sale/property-29549649.html

Now the impact that new builds have had on the Spennymoor property market has been large. It comes in more than one form, but let's take a quick look at where things have been impacted-

Mortgage demand

The government has put in incentives in the past that have incentivised the buying of new build homes. Nationally, this makes sense, as the country isn't producing enough new homes to satisfy demand and keep house prices on an even keel. But the majority if new homes are needed in and around London, where demand and house prices have soared.

The incentives have included low deposits for buying new homes (one if the earlier incarnations if Help To Buy) and this has made new build properties easier to buy than pre-owned properties in Spennymoor. Add to this the incentives that the builders offer and part-exchange then the desirability if a new home goes through the roof, financially.

Part-exchange

This is a marketing tool used by the builders to ensure that they can shift their properties quickly, and not be involved in lengthy chains. The downside it has had on the Spennymoor property market has come when the part-exchanged property is then sold in. The builder doesn't want to hang into this asset for long, so sells it at a price lower than market value. This makes other nearby properties look poorer value and subdues the asking prices. Add to this the valuation a surveyor puts on a property for mortgage purposes, and they take recently sold properties as a comparable and a benchmark, then even properties with an agreed sale may fall foul of the mortgage lender when they disagree in a true valuation.

Loved and lived in

One if the advantages the new property builders have, and use, is the show home. They are able to produce a property that looks fantastic and appeals to buyers by spending a bit of money on it and by having the show home kitted out with all the 'optional extras.' Someone living in their own home doesn't have the luxury of doing this. They have to live there every day and this creates dirt, objects and time-constraints that the show home doesn't have to deal with. Immediately, every pre-owned home in Spennymoor looks in some way inferior to these carefully stage-managed versions of the truth, and selling a pre-owned home becomes more difficult.

Now, you may say that these above would be the case anywhere, but I disagree. The fact that Spennymoor has had SO many new build sites in a short period of time, plus the fact that the high demand for property probably lies elsewhere means that the effect will be amplified here.