As recently as 2012 buying an existing house was cheaper than building a new home, but that was before the days when a two-bedroom cottage in Mangere Bridge sold for $1.7 million.
Another thing that's changed is the wisdom of buying a shabby do-up and applying a bit of elbow grease to add some shine to your investment. Again, that was in the good old days before overseas investors, 20% LVR deposit restrictions on existing owner occupied properties, 40% LVR deposit restrictions for existing rentals and exploding immigration.
Signature Homes CEO, Paul Bull, says “searching for your dream home used to be a fun adventure, that was until a large number of properties sold started to sell through auction, particulalry in Auckland. Clients come to us talking about the heartbreak, frustration and anger from missing out time and again in the auction room bidding wars.
"I've heard stories from people who are exhausted, homeless and depressed after nine months and 50 auctions, by which time house prices in Auckland have risen by 10 to 12 percent – that's $70,000 on a $700,000 house.
"Sometimes they kick themselves that they hadn’t looked at house and land packages sooner.” House and Land packages are offered by most building companies, they can take one of the biggest problems out of building, access to land. It will take time for the build to be completed but can save time, money and frustration in the long run.
Paul points out that new homes come maintenance free, with no hidden issues – clean, pristine and never 'lived-in'. In essence, no nasty surprises when the first heavy rains of winter turn up.
"Besides the obvious advantages of owning a new home, the affordability factor is very important. For one, you don't need a 20 per cent deposit for a home you are going to live, in or 40% for a rental. This is because new builds are not included in the New Zealand Reserve Bank's loan-to-value ratio (LVR) restrictions.”
Building a new home may take 9-12 months, but by purchasing now, there are advantages. There are also finance and payment options available through construction finance which make paying rent or an existing mortgage manageable.
It’s not something everyone understands but Paul explains that the Government recognises there is a need to build more homes so has lifted lending restrictions on deposits. "With different deposit requirements applying to new builds and house and land packages, it also means the amount you currently have saved could secure you a home and have the build completed in a similar amount of time as it would take you to save a 20% deposit.”
This is particularly relevant if the market moves up in the same way it has in the past few years. If a buyer tried to save a 20% deposit on a used house, that's $180,000 on a $900,000 property now, it can then become $200,000 (or more) on the same house a year later if its price rises to over $1 million. It could take the buyer years to save that amount of money, but you can actually secure a house and land package on half of that.
With respect to the quality of home you get with a new build, the leaky homes disaster that affected homes built between 1994 and 2004 means that the current Building Code requirements are to a very high standard. Anybody building a house now will get a home constructed to stringent quality standards.
These include technologically advanced building materials and superior quality insulation and glazing compared to existing properties. What’s more many house and land packages are in developments with well-planned neighbourhoods designed for today's lifestyle which include cycle tracks, access to public transport, parks and green belts.
The key to building, however, is to choose your builder with care. Signature Homes has been building homes for more than 30 years all across New Zealand and gives market leading guarantees. These include fixed price guarantees before work starts on the build, weather tightness guarantees and a home completion guarantee which provides 100% protection on any payments made during the build.
For more information about building your own home, or house and land packages located across Auckland and NZ, drop by one of our show homes or visit call 0800 744 628.