The property market has been struggling over the last few years as home loan interest rates skyrocketed and the country has been in recession; however many economists are predicting that this might change during 2025 and we could start seeing house prices start increasing again.
number of first home buyers that are choosing new builds.
Of course a lot of Kiwis do dream of a brand new home, but often first home buyers are told to start with a run down place.
Yes, it makes sense to ensure that you are buying a home that fits within your budget.
But does that need to exclude a new build?
New Builds Are Not Always Expensive
There is a perception that a new home will cost more.
It is easy to blow the budget when building a new home, but many of the building companies are building lower cost homes designed specifically for first home buyers.
These lower cost homes still come with many of the benefits of the more expensive new homes.
The cost of a new home can be split up to the cost of the land and the cost of the build.
The Land – the cost of the land can make up a significant part of the overall cost and especially in larger cities when land is in short supply. What we are seeing in many of the new suburbs are a number of smaller sections designed to help keep the total cost lower, and while some people want larger sections this is something that you may need to accept when you need to keep within a budget.
The Build – there are many ways that building companies can keep costs down and it doesn’t mean that the quality is poor. When you are building your dream home you may want to use top quality and rather expensive materials, but you can also select materials that sit within a budget. You can use standard joinery, pine decking, reasonably affordable appliances and floor coverings etc. Yes, you may want a top of the line Miele oven which costs over $10,000 but you can also get some good ovens for about $1,000.
If you are considering buying your first home then you should go and have a look and see what you can get within a budget.
You may be surprised.
Other Reasons That First Home Buyers Choose New Builds
As a first home buyer you probably already know that buying a house is a major purchase.
Apart from just wanting a new home, there are some other reasons that first home buyers are looking at new builds.
Let’s consider these three other reasons new builds can be a good option;
- Set Prices – the property market is likely to start increasing it’s hard for first home buyers as you need to buy as soon as possible and maybe that’s a few months too soon. It can be better to buy now at today’s prices and yet not settle or start paying for a few months.
- Incentives To Go New – the Reserve Bank have understood the lack of new homes being build has caused significant price increases. So in an effort to get more homes built they have excluded new builds from the bank LVR restrictions and therefore it is easier to get lending on a brand new house.
- More Time – many new builds are sold off the plans and so your new home may be a few months before it is ready. While you may want to move straight in, the extra time can be a real bonus as it means you can buy at today’s prices but have time to save a bigger deposit and hopefully watch the value increase too.
There are some things that you need to be aware of too.
New Homes May Need Some Finishing Touches
When you build a new build you may end up with a nice but often bland house.
Many of the building companies do use these bland colour pallets to ensure that they do not put buyers off, and they also do not install window dressings and do just the bare minimum of landscaping on the property too.
So you may want to add some touches of your own.
We painted out a wall and installed a large mirror to make a statement and it worked really well. The use of mirrors is a great way to increase the perceived size of a room too.
Why add mirrors? READ MORE HERE
It may seem like a very minor thing to do, but this type of change allows you to put your mark on your new home and the cost can be minimal too.
It’s always a good idea to have a look for ideas with both brand new homes and those that may be just a few years old.
Consider Your Mortgage Structure Too
While it’s easy to focus on just interest rates, you should consider your mortgage structure carefully.
As mortgage advisers we often see people that are so excited to be buying their first home and forget to spend the time discussing and deciding on a suitable loan structure.
While it may not seem important at the time, it actually can make a huge difference over time and you should take some time to get this right as it can save you thousands of dollars and help you get debt free faster.
A good loan structure can also give you options and financial protection in the future.
If you are planning to buy a new build then you could consider Pro Fund Me too.
Even if you have already arranged your mortgage directly with the bank, a good mortgage adviser will still offer you free advice on how to structure your mortgage so that it suits you now but will be flexible enough in the years to come.
It’s one of the benefits of using a mortgage adviser.
If you work with good mortgage advisers then you can get all your questions answered, and also rest easy knowing you will have your lending with the right bank too.
