WHY do people buy plots to build houses on?
The International Valuation definition is ‘The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’
I’ve underlined the important bit. Because when many villas are selling at prices not much higher than neighbouring plots, to buy land might not seem quite so prudent.
We’ve just carried out a detailed valuation of a number of country villas and plots in a high value, well-established urbanisation.
The urbanisation is beautiful and stretches down a tree filled, south-facing hillside, with a number of valleys and crests giving the possibility of different views and aspects, sun and shade, flat valley bottom or hilltop ridge, extremely private or less so.
The villas, built over the last 40 years, have had the choice of the best sites with established access, great views, privacy and mature gardens blending in with the landscape.
With the older properties, the style may be somewhat dated and the services will need overhaul or even replacement to enable our much more technological lifestyle.
In between those villas there are many sites, some of a hectare or more, which are now slightly off pitch, with overly-steep slopes that need terracing and many steps, or with partially-interrupted views or sun in the morning or evening but not all day, as many of the original ‘settlers’ enjoy.
Now the strange thing is that these sites are being offered at very high prices, while many of the villas are also for sale, perhaps by older first-time owners.
Because due to surplus of supply, many of the villas are priced at not much more than the bare sites!
Buyer 1. – Lovely site, lovely partial views, not quite private or the best in the area but hey, let’s spend 25% over budget, not knowing what’s happening half the time, and put up with two years of stress and argument so that we can eventually sit on the terrace and recover from it all.
Buyer 2 – Existing ‘run-down’ villa in the best location, as the person who built the house some time ago had the choice of the whole valley. The house isn’t the style we want, but we can change that at half the price, and in half the time, of building new. The roads, the services, the site levelling and planning are all in place, much easier all round.
Buyer 2 will have a more marketable property in the long run because of the better location.
So back to my first question – why buy a plot?