Building company Persimmon reports that its sales of new homes in the first six months of this year were 6% up on the same period last year. The figures are significant because Persimmon is the country’s largest housebuilder. It sold 4,712 new homes in the first half of 2012 at an average price of £171,400. Persimmon also managed to achieve an increase of 7% in the average price over the same period last year.
What lessons can landlord insurance clients draw from this? Does it mean that if buyers find new homes attractive then renters will as well? Buying a new house as a buy to let investment should certainly mean less work and expense on maintenance compared to an older property.
Meanwhile the Bank of England reports that new residential mortgage lending rose in May at the weakest level for several months. In April net lending was £1.04bn but in May the figure was just £563m. A few years ago when things were booming it was quite normal for lenders to approve 80,000 loans a month whereas in May the figure was only 51,098. Judging from Persimmon’s figures it seems that buyers are finding it easier or more attractive to buy a new home rather than an older one. There could be many reasons for this; the absence of a chain for example and perhaps less expense on re-decorations.
Perhaps people are finding it easier to raise a mortgage on a new build. For both professional investors and owner-occupiers there remains one big question to which no one knows the answer. Will a new build represent a better long-term investment than an older house? The glut of town centre flats that were built a few years ago shows that there is no such thing as a guaranteed return on any property investment.