Purchasing off-plan usually involves buyers visiting a show home or sales suite and reserving a plot based on marketing materials and floor plans.
Here, Which? looks at how many homes are being sold off-plan, the pros and cons of doing so, and what areas are currently hotspots for new housing developments.
Decline in homes sold off-plan
Overall, the number of homes being bought before completion is falling year-on-year, and is now at its lowest level in 10 years.
Research by Hamptons shows that 34% of new homes were sold off-plan last year, down from a peak of 46% in 2016.
Hamptons suggests the steady decline in buy-to-let investors has played a big role in the decreasing figures.
Find out more:First-time buyers driving off-plan sales
Of the homes sold in advance of being built in England and Wales last year, 67% were secured by first-time buyers.
In 2015, 70% of off-plan buyers were investors, but this figure has dramatically fallen and now stands at just 21%.
Landlords – who are known to buy multiple units at developments as a way of building their portfolio – are now less inclined to do so as a result of pinched finances.
Terraced homes the most popular
Due to the lessened appetite from buy-to-let investors, the share of flats being sold off-plan has fallen.
They had long been the most popular property type to reserve, but Hamptons data shows terraced homes are now leading the way for the first time in 16 years.
In total, 46% of new-build terraced homes were sold off-plan in 2022, compared to 44% of flats.
Find out more:Where are most off-plan homes being bought?
Luton takes top spot in Hamptons' rankings, with 83% of all new homes sold in advance of completion last year.
The Bedfordshire town is followed by Manchester (72%), Birmingham (66%), Stoke (65%) and Brighton (61%).
At the other end of the scale, there were 57 local authorities where no new homes sold off-plan in 2022. These were rural or suburban places where new homes tend to be detached or semi-detached.
Where are new homes being built?
Major housebuilders have suggested they will build less homes this year due to the subdued demand. Firms such as Taylor Wimpey, Barratt and Persimmon are all reporting less interest, with the latter recording a 42% fall in completed property sales for the first quarter of this year.
Developments, however, continue to pop up around the UK as the government aims to fulfill its target of building 300,000 homes a year.
Figures from the Office for National Statistics (ONS) break down how many new homes are being built in each local authority area.
Over the past five years, more homes have started being built in Edinburgh than anywhere else in the UK.
The pros and cons of buying off-plan
Reserving a home in advance can sometimes be the only way of securing a property at a popular development, but that doesn't mean it's always the right thing to do.
Pros
In addition, you'll have a good chance of securing a better plot, and you might get to choose some fixtures and fittings. You'll also be moving into a house with no wear and tear, and the buying process should be relatively simple as you won't have to negotiate with a seller in a chain.
The new home will come with a warranty, which can cover faults in the design and workmanship of the property.
Cons
New homes also typically come with a 'new-build' premium, meaning you typically pay more than what you would for a pre-existing home. Research by Alliance Fund earlier this year found buyers were paying on average 19.3% more for new builds.
Off-plan purchases can also be plagued by delays. You'll need to have a clear commitment as to when the property will be finished, so you can ensure your mortgage offer will be valid for long enough. You could lose your deposit if mortgage issues mean you can’t proceed with the purchase.
If you're one of the first people moving into the development, you might find you're living on a building site while the other properties are being completed.
undefinedsource https://www.which.co.uk/news/article/should-you-buy-a-new-build-home-off-plan-aMclQ2V5g4Sd