Why are apartments in a new building more expensive than secondary housing?

Before buying an apartment, investors have to look through many options and plunge into the intricacies of choosing a property. One of the first questions that most buyers face — What is better to choose, a resale or a new building? After all, both options have both their advantages and disadvantages.

Among the undeniable advantages of apartments in new buildings: the best quality and new construction technologies, landscaping, thoughtful layout and high liquidity. But often high-quality housing from a developer is more expensive than secondary market properties.

To make it easier for you to make an informed and correct decision, in our article we will look in detail at how real estate prices are formed and what are the advantages of new apartments and why such objects are more expensive than living space on the secondary market.

How real estate prices are formed

Pricing of real estate in both the primary and secondary markets depends on local and global factors , for example, territorial location and area, status of a settlement, solvency of the population and macroeconomic conditions.

For primary real estate

Primary real estate — these are apartments in new buildings, that is, housing in which no one has lived yet. Such properties are becoming increasingly popular in the housing markets of different countries, as they have a number of advantages over the secondary market. However, not all buyers understand why the price tag for new apartments is usually higher than for second-hand housing. How does the developer price apartments? Let's find out!

When determining the cost of a new home, several main factors are taken into account:

• The name and reputation of the developer

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If a developer has already proven himself to be the best and has an extensive case history of successfully implemented projects, then naturally his price for projects under construction will be slightly higher than that of competitors with a dubious or unsupported reputation. At the same time, an investor who soberly assesses the market is always ready to overpay a certain amount for the confidence that construction will be completed on time and the house will comply with all construction standards.

• Positioning and class of real estate

There are 4 classes of real estate on the housing market of most countries — economy, comfort, business, premium. The positioning of housing under construction by the developer directly affects the final cost of the objects.

• Building materials

The pricing policy of a construction company is primarily based on for the cost of building materials. For the construction of business and premium class houses, high-quality materials are used, the cost of which is always an order of magnitude higher than cheap raw materials. In addition, the rapid growth of the price tag not only for materials, but also for their delivery, as well as labor costs plays a huge role in pricing.

• Location

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The location of a new residential complex determines the price per square meter: in a prestigious area by the sea with developed infrastructure, apartments are always more expensive than in unpopular locations located far from the main city amenities.

• Area

The formation of the cost of housing is directly influenced by its area. At the same time, developers annually expand the range of apartments on the market and offer both spacious and compact options. Today, even in new business class buildings, it is possible to purchase small apartments.

• View characteristics

Apartments with good panoramic views &mdash ; to the sea, city or mountains — are always more expensive than housing whose windows overlook the courtyard or a noisy street.

• Prospects

Construction companies are laying The cost per square meter includes not only the existing characteristics of the object, but also future benefits for the investor, for example, if active development and improvement of the area is planned in the near future or a convenient transport interchange will be built. This means that in the next few years, owners will be able to make money by reselling or renting out such housing.

• Construction quality

< p>The safety, heat, hydro and noise insulation of the residential complex will directly depend on what materials and construction technologies the developer uses. Today, good developers use monolithic technologies that combine the best price-quality ratio. In addition, the most important criteria for assessing the quality of construction of new buildings are: the concrete strength coefficient that meets the requirements (C25/30), the use of environmentally friendly and durable finishing materials, utilities, that is, everything that an investor ultimately receives in property after purchasing an apartment.  ;

• Internal infrastructure

Most new residential complexes, for example, in Turkey, boast a diverse internal infrastructure located directly on local area. Homeowners have access to swimming pools, SPA, recreation areas, parking, 24-hour security and many other options. The variety and quality of infrastructure influence the pricing of new buildings.

• Stage of readiness

As a rule, apartments from the developer increase in price in stages . That is, apartments at the zero stage of construction are always cheaper than objects in a commissioned complex. This means that the closer the construction is to completion, the more expensive the housing. In addition, the price tag naturally increases for turnkey apartments.

For secondary real estate

The main pricing factors in the secondary real estate market are:

• Location of the house and proximity to urban infrastructure

These are key aspects that affect the cost of secondary real estate. The proximity of developed urban and transport infrastructure, business facilities, and accessibility to recreational areas make the secondary property more attractive to potential investors and increases its value. It is natural that housing in a prestigious area will cost more than apartments in remote city areas with insufficiently developed infrastructure or, for example, near industrial facilities.

• Condition of the house

In the case of secondary real estate, pricing directly depends on the condition of the building. In obsolete buildings, built using old construction technologies, with worn-out utility lines, housing is cheaper.

• Condition of the apartment

This factor in the formation of prices for secondary goods includes: the state of finishing, repairs, deterioration of electrical wiring, plumbing and other engineering. A recent renovation or major overhaul, as well as competent pre-sale preparation, can increase the cost of an apartment.

• Area

The rule is The larger the area, the more expensive the apartments; this does not always work. Of course, a larger square footage often means a higher cost. But in addition, the price tag is determined by the ergonomic layout and functionality of the living space. Thus, two objects of the same area can have completely different prices.

• Floor

Secondary housing on the upper floors with good views from the windows are more expensive than apartments on the ground floor. On the ground floor, the price tag may also be lower due to the risk of mold and noise from the street.

• Legal cleanliness

Legal purity of the object — an important factor in pricing secondary housing. The absence of any legal complications or encumbrances on the apartment affects its value and popularity among buyers. So, if the owner has prepared the property for sale by collecting the required documents, and it does not have any encumbrances, then the price tag may be slightly increased, for example, compared to real estate under a mortgage.

Why are apartments in new buildings are more expensive than resale

In most countries of the world, the cost of quality apartments in ready-to-move-in new buildings is more expensive than in pre-owned, that is, resale real estate. And there are several quite objective reasons for this.

Increasing prices for construction materials

In the construction and real estate sales markets of many countries popular with investors, there is a general trend — a noticeable increase in prices for building materials. One example is the Turkish housing market, where construction costs are rising, since developers buy basic building materials and prices are fixed on the basis of world currencies (dollar and euro). However, here it should be taken into account that after completion of construction work, buyers receive modern, safe housing in all respects, built using the latest technologies and materials.

Quality of new real estate

Housing experts market agree that new buildings — This is definitely a more profitable investment, since such apartments are built from high-quality materials and have modern finishes and equipment. In addition, new, ready-to-move-in apartments are in noticeably greater demand among tenants.

Improved layout

Apartments in old residential buildings often do not have convenient planning solutions. That is, for a comfortable stay after the purchase, the owners have to do redevelopment, which requires additional and considerable financial costs.

In new buildings, developers take the layout seriously: they think through the ergonomics of the premises and the variety of options for the different needs of buyers. For example, a spacious kitchen combined with a living room, a large balcony with a seating area, several bathrooms.

Investment attractiveness

From an investment point of view, new buildings are definitely more reliable and more profitable than secondary ones. An increase in the price of objects on the primary market occurs already during construction work: the price tag for new apartments from the stage of laying the foundation to the commissioning of the residential complex increases by 30–40%. That is, immediately after completion of construction, an investor can earn money by reselling the finished apartment at a much higher price.

Primary market properties benefit from secondary real estate and from the point of view of long-term investments. Thus, new apartments, even after 5-10 years, will be easier to resell than obsolete housing.

Modern infrastructure

Full landscaping and varied infrastructure in the local area — another reason why new buildings are more expensive than resales. When arranging new residential complexes, developers take into account all the needs of future owners: they build playgrounds, recreation areas, gyms, swimming pools, SPA salons, think about a sufficient number of parking spaces, reliable security of the territory, landscape gardening and much more. And the modern buyer is ready to pay for convenience and comfort.

The opportunity to get an installment plan

Purchasing real estate in a new building — This is a good opportunity for buyers to take advantage of installment programs offered by developers. That is, even without having the entire amount in hand at once, an investor can pay the down payment and purchase a home.

Subjective conditions of sale

If from reliable and experienced developers, as a rule, everything goes according to plan, then in the secondary real estate market the human factor often plays a decisive role: there are both sellers who are in no hurry and keep the price, and those who, for one reason or another, dump, reducing the cost of objects in order to urgently sell real estate. This is one of the common factors why new buildings are more expensive than secondary housing.

Which property to buy — apartments from the developer or resale? Which is better — lower cost or quality, safety and comfortable living for several generations to come? It's up to you!

If you are interested in purchasing apartments from a developer on the Mediterranean coast in sunny Alanya, contact Nordic Property Construction! We will select high-quality, marketable real estate for any needs in our own residential complexes