Short answer:
Because the price of a new build includes a developer premium that disappears once the property is no longer new.
This is structural, not a mistake.
What the “new build premium” is
When you buy a new build, you are not just buying the property.
You are also paying for:
- Brand-new condition
- Choice of finishes
- Incentives bundled into the price
- Marketing and sales costs
- Developer profit
These costs are embedded in the initial sale price.
Once you own the property, that premium is gone.
What happens the moment it’s resold
As soon as the property is no longer classed as new:
- It is valued against comparable resale homes, not new builds
- Incentives are stripped out
- Buyers become more price-sensitive
The market resets the price to what similar second-hand homes are worth.
This often looks like a loss, even if the wider market is stable.
Why incentives hide the true price
Developers often offer incentives such as:
- Stamp duty contributions
- Free upgrades
- Cashback or legal fee support
These benefits are rarely reflected in official sale prices.
Mortgage valuations are based on headline price, not incentives, which can exaggerate the apparent value at purchase.
The role of mortgage valuations
Lenders are cautious with new builds.
They often:
- Apply stricter loan-to-value limits
- Use conservative comparables
- Assume short-term depreciation
This affects both initial borrowing and resale expectations.
Why this doesn’t happen to every new build
Value drops are more likely when:
- Supply is high in the local area
- Developments are large and uniform
- Incentives are aggressive
- The wider market is flat
Smaller developments in constrained areas can behave differently.
Why people are surprised by this
New builds are marketed like consumer products:
- Clean
- Modern
- “Better than old”
But property markets price comparables, not condition.
Once the marketing layer is removed, pricing becomes mechanical.
The practical takeaway
New builds are often best thought of as:
- A lifestyle choice
- A convenience purchase
- A long-term hold
They are less suited to short-term resale expectations.
Understanding this helps align price, timing, and expectations.
One simple next step
If you’re considering a new build:
Compare the price to similar resale homes nearby — not to other new builds.
That comparison reveals the embedded premium.
New builds are priced for first ownership, not immediate resale.