Housebuilders hold prices despite sale delays
Jonathan Samuels, of Octane Capital, reports that one in eight new build properties are unsold after six months.
Housebuilders are resisting pressure to cut prices despite around one in eight new build properties remaining unsold after six months.
That’s the finding from analysis of sales by specialist lender Octane Capital that shows developers are increasingly prioritising profitability over speed of sale.
A quarter of new-build homes have been on the market for longer than three months.
Around 13% have not attracted a buyer for more than six months, while 4% have remained on the market for more than a year.
Price reduction
Applied across England’s estimated 34,831 new-build homes currently for sale, it suggests that around 4,400 completed new-build properties are unsold after six months.
However, only 14.5% of all new-build homes currently for sale have seen an asking price reduction.
Many developers would rather give themselves additional time to sell.”
Jonathan Samuels, Chief Executive of Octane Capital (pictured), says: “The immediate assumption is often that if new-build homes aren’t selling quickly, developers will simply reduce prices, but in reality that’s often the last option they want to consider.
“Every discount comes straight off the bottom line and, after several years of planning, construction and rising build costs, protecting profitability has become more important than ever.
Eroding value
“Many developers would rather give themselves additional time to sell than unnecessarily erode the value of a scheme, particularly where market conditions remain relatively stable and buyer demand is still there.”
He adds: “That’s why developer ‘exit finance’ has become increasingly important. It provides developers with the breathing space to refinance completed schemes, release capital and continue selling without the pressure of having to accept lower offers simply to satisfy an approaching loan maturity.”
