Traditionally, new homes have typically cost 15 to 20 per cent more than older resale properties. During the buying frenzy between 2004 and summer 2007, this differential was up to 40 per cent in new-build hotspots such as Docklands, and as much as 100 per cent at top-end developments in Knightsbridge.
When the crash came, developers in the mainstream market were forced to slash prices to survive, sometimes to below the value of second-hand properties. This made new homes an attractive option for first-time buyers, and they remain so. This is the message being trumpeted by house-builders during September 2010 - New Homes Month - a campaign aimed at boosting sales.
Property analyst Hometrack confirms that new homes remain good value. Builders are under pressure to sell, which means buying opportunities for people with a deposit and mortgage funds in place.
Moreover, housing associations are now major developers in their own right and have a mission to make new homes as affordable as possible, through shared ownership and other low-cost initiatives.
Research by the National Housing Federation, which represents the affordable housing sector, says prices are likely to jump by more than 20 per cent during the next five years. Getting on the ladder now may prove to be a smart move.
New homes come with certain advantages: modern interiors and flexible room layouts, energy efficiency and reduced running costs. Also, some developers offer design choices plus incentives not available in the second-hand market.
Last week, 16 stalled housing and regeneration schemes in London were given £50 million of kick-start finance by the Homes and Communities Agency. This will bring more than 500 affordable new homes to the market. But supply remains tight and some commentators warn of a looming undersupply of new homes because of the fall-off in construction activity, which will lead to the new-build price premium being re-established.
Royal Gallery at Kingston-upon-Thames is one of the kick-start schemes. Launched in mid-September, 2010, a number of the 78 apartments are available through the Government's HomeBuy Direct scheme, which enables buyers to move in for 70 per cent of the price upfront. The remaining 30 per cent is provided jointly by the Government and the developer, and is interest-free for the first five years. It can be repaid at any time or on resale. Prices from £250,000. Call Crest Nicholson on 0870 751 3956.
New development in Kingston has been relatively constrained. Charter Quay is a popular riverside scheme off the market square with a piazza featuring shops and restaurants plus the new Rose Theatre, modelled on the original Tudor one discovered in Southwark. Coming soon is Kingston Riverside, a waterfront scheme by developer St James Urban Living.
Apartments in a listed Victorian former police station in Ladywell, SE13, are for sale through Affinity Sutton housing association. Called The Annexe, one-bedroom flats start at £175,000 (or £70,000 for a 40 per cent shared-ownership stake). Two-bedroom apartments cost from £215,000. A deposit of only five per cent is required to buy. Call 020 8313 0660.
Barratt claims to sell more new homes to first-timers in the capital than any other developer, and is targeting such buyers at cheaper, well-connected outer London schemes such as Park House, Acton, and Evolution, Stanmore. Prices from £250,000. Call 020 8326 7171.
Also in Stanmore, not-for-profit housing provider A2 Dominion is offering 200 affordable homes, a mix of shared-ownership and rental properties. These homes are part of a new 800-home community, with lake, cycle paths, play areas and 24-hour concierge being built by developer St Edward Homes. Prices from £240,000. Call 020 8952 2853.
In much-maligned Croydon, apartments in the handsome, listed Victorian tower of former Queen's Hospital stand out as good value. Two-bedroom flats are priced from £215,000. Call 020 8655 1300.