BLOGS

New-build pricing turns from premium to discount

For most of the post-financial-crisis cycle, new-build homes commanded a premium over comparable resale stock — buyers paid extra for warranties, energy efficiency and the ability to specify finishes. That premium has been quietly eroding, and REalyse transaction data now shows it has flipped into a discount.

Across the last two years, new-build achieved prices have moved from selling roughly in line with asking price to consistently settling 1-3% below it, with the gap widening into negative territory in more recent quarters. Resale stock, by contrast, has held a small positive premium over asking price throughout the same period — a sign that vendors of existing homes are pricing more conservatively and holding firmer, while developers are having to buy their way to completions.

This is not a dramatic collapse. Average new-build achieved prices have stayed comfortably above resale averages throughout, reflecting the mix-shift towards larger, higher-specification suburban homes. But the direction of travel — discount widening even as headline asking prices rise — is the more telling signal for anyone underwriting development finance or forward-funding deals.

What the data shows on days on market

Days on market for new-build stock has generally tracked close to, or slightly above, resale equivalents — both hovering in the mid-90s to low-100s range over the period. That parity itself is notable: new-build has traditionally offered developers more control over marketing timelines, including phased releases and incentive packages, than the open resale market. Convergence in time-to-sell alongside a widening price discount suggests developers are trading price for pace, not the reverse.

Off-plan sales fall to a 12-year low

The headline figure putting this in context nationally comes from Hamptons: just 33% of new homes in England and Wales sold before completion in 2025, down from 36% in 2024 and the lowest share since 2013, against a peak of 49% in 2016. Buy-to-let investors — historically the biggest buyers of off-plan stock — have been steadily retreating, a trend accelerated by successive increases to the additional dwelling stamp duty surcharge, most recently to 5% at the end of 2024.

REalyse listings data is consistent with that direction of travel: the volume of new-build listings explicitly marketed as off-plan has fallen year-on-year across the past two years, reinforcing that this is a genuine shift in developer go-to-market strategy rather than a reporting artefact. Housebuilders appear to be launching schemes later in the build cycle, holding stock back until units are closer to completion, or leaning harder on incentives rather than upfront off-plan pricing to secure buyers.

Why off-plan matters more than it looks

Off-plan sales have always been the working capital engine of housebuilding — deposits banked early, forward sales that de-risk the scheme, and cash that offsets development finance drawn against land and construction costs. Hamptons estimates the decline in off-plan share has added roughly £264.5m in additional financing costs across the sector in 2025 versus a decade earlier, equivalent to around £3,125 per home sold, with roughly half of that increase attributable to higher interest rates.

For lenders and credit teams, that's a direct margin and covenant question. Slower off-plan absorption means development finance facilities run longer than underwritten, increasing exposure at a point in the cycle when interest costs are already elevated. For investors weighing forward-funding or forward-commitment structures, it reframes the risk premium that should be attached to schemes without a strong pre-sold pipeline.

Flats versus houses: a structural, not just cyclical, shift

Part of the off-plan decline is compositional. Flats — which sell off-plan at much higher rates than houses — have fallen from 54% of new homes sold in 2007 to just 22% in 2025, as housebuilders pivot towards lower-density, house-led suburban schemes that sell faster and carry less balance-sheet risk. Even within flats, off-plan share has held up better in the North West and London than across the South West and South East, where the steepest falls in both off-plan activity and overall demand have concentrated.

This matters for how the "correction" should be read. If the decline were purely cyclical — driven by interest rates and buyer affordability — we'd expect it to reverse quickly once rates ease. But a deliberate shift in product mix, land strategy and planning pipeline composition points to something closer to a structural repositioning of the sector, with housebuilders protecting margin on volume rather than chasing density.

REalyse's planning pipeline data shows the volume of residential units moving through the "in progress" stage has grown substantially over the past four years, even as sales pace has slowed — a gap between what's coming through planning and what's actually transacting that's worth watching closely for oversupply risk in specific local markets, particularly where flat-led schemes dominate the pipeline.

Outlook: correction, not collapse — but a longer one than usual

The data points to a sustained adjustment rather than a short, sharp correction. New-build discounting is a rational developer response to weaker off-plan absorption and higher financing costs — but it's happening alongside continued growth in the planning pipeline, which could extend the adjustment period if completions land in local markets that are already digesting elevated resale stock.

For developers, the priority is matching build-out phasing to realistic off-plan absorption rates by region and property type, rather than historical assumptions from the 2016 peak. For lenders and investors, comparables-based underwriting that separates new-build from resale performance — and flags schemes with high flat-density and southern-England exposure — will be increasingly important for pricing development finance risk accurately. Agents advising vendors of existing stock, meanwhile, may find a modest relative advantage as new-build competes harder on price to move completed units.