Why today’s new-build homes reflect yesterday’s market – Pierson

This, said the market analysis from Hometrack, was out of step with demand. 

Based on the firm’s data, new-build homes sold in 2025 were, on average, more expensive than three-quarters of comparable resale properties. 

Around 40% of new-build sales and valuations were for four-bed-plus houses, yet just 24% of new-build enquiries on Zoopla were for these property types.

Hometrack highlights an interesting trend – we obviously have the wrong mix of housing coming through. 

But it’s not quite as cut and dry as the data suggests; it only shows a snapshot without explaining how we got here. 

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Meeting demand properly 

Let’s start with an obvious truth – it’s not in builders’ interests to build homes no one wants. 

Houses sitting empty are a cost on the balance sheet; an asset they must protect while it stands empty. So what’s going on? 

The output we’re seeing now is the result of market dynamics at play some years back. 

Many of the homes completed last year and those under construction now were conceived three or four years ago, when land prices had gone through the roof, and buyer demand looked very different. 

At that point, Help to Buy was at its peak and the number of couples who wanted to buy four-bed houses using Help to Buy was stratospheric. First-time buyers were able to leapfrog the starter home and go straight into a larger, even their forever, home, allowing them to avoid more stamp duty costs further down the line. 

Great news because larger homes equal bigger profits. 

But today’s landscape is very different. In the absence of an equivalent government-backed scheme like Help to Buy, the trend has shifted towards more modest homes. 

Builders have already begun to react. 

We know of some developers who typically build larger properties that have gone back to local authorities for replans in order to build smaller units to change their original design and resubmit plans to build smaller units 

But it’s like trying to turn around an oil tanker – changing direction is not a quick process and the homes they build now must generate enough revenue to recoup the high cost of land some years ago. 

On top of that, they’re facing the uncertainty of the Future Homes Standard. 

Developers don’t know how to act because they don’t know what the criteria will be. 

And as we’ve seen from the Budget, delays and uncertainty cause inertia. 

The new-build market faces different challenges 

The housing market clearly needs more support from the government, whose revolving door of housing ministers – some 17 housing ministers since 2010 – leads to a lack of ownership over policy decisions made by outgoing officials. 

This lack of continuity is going to reduce effectiveness even for the most able of operators. How long would a builder, broker or lender remain fully effective if their CEO changed every six months, and what would this say about the organisation? 

‘Shambles’ comes to mind. 

If the government wants to speed up change, it needs to seriously consider incentivising starter home-style properties, streamlining the planning process and appointing the right amount of planning officers to deal with volumes. 

And, deal swiftly with its reform of the home buying process to save some of the half a million housing transactions from falling through, which costs the economy £1.5bn per year. 

In the meantime, the mortgage market has stepped up – in some cases, in partnership with developers – to offer borrowers ways to afford the homes available to buy today. 

With the huge steps forward in innovation from lenders, driven by the regulator’s hunger for mortgage market reform, borrower affordability is better than it’s been in years. 

That’s given us a reason to get back on the phone to clients who couldn’t buy the home they wanted six months ago to review their circumstances in the hope that now they might fit. 

So, while we wait for the government to act and the oil tanker to turn, my preference is that, rather than be critical of what is not happening, let’s celebrate what is.