When is the right time to build a new house?
This is a question that many people often ask themselves. Whether an investor, renter, first-homebuyer, or dreaming about that new custom designed home, we have all pondered when right time to build a new house might be.
Various market indicators have shown that enquiries for building a new home, and purchasing land and real estate, have increased recently.
This is especially the case since the Australian government announced a host of new home and renovation construction grants for consumers to help give the economy a boost.
Confidence in building a new home in WA will continue to grow, based on key market indicators.
Population growth combined with employment growth will eventually take up the residual of established real estate properties. This will increase property values for established properties and increase costs involved with building a new home.
Supplier costs and trade rates have been moderate in recent years, but will rise with future demand.
Property values were overheated throughout the mining boom period in WA. However, as the boom slowed, property values have been to the advantage of the purchaser.
This scenario may be short lived though, with values returning to a more realistic level. While values may not yet return to those seen during the boom period, they are likely to experience a steady growth, equivalent to the periods preceding the boom.
So, in our opinion, the answer to the question of whether 2020 and coming years is the right time to build a new house, is that there has never been a more right time to build a new house than right now.
Certainly not during the almost 40 years that I have been part of the WA building industry.
There are several key advantages for new home buyers right now:
- Supplier costs to builders are stable in the short term, keeping building costs stable.
- Trade rates have reduced to realistic levels and availability has increased with all trades.
- Construction times have reduced due to more than ample trade availability, saving rent for owners.
- The industry is much more competitive than ever, adding value to home buyers.
- Historically low interest rates from the Reserve Bank which are forecast to remain for some time into the future.
- Competitive and innovative finance available from many lenders in the finance sector.
- Confidence that property values will steadily increase, which will be pertinent to newly built properties.
- Current and future employment growth in WA is assisting the economy and confidence in WA.
- New major projects in WA, both public and private, which will create more employment and growth.
- Faster building approvals with the advent of Private Certification of Building Surveyors, saving time and rent.
- Fewer delays with supply of materials and labour, which may change with market demand.
- Increased quality control for construction generally, with more highly skilled trades seeking work.
- Increased value to prospective home buyers, due to the competitive market between builders.
- Those who commit to build now will avoid projected cost increases from suppliers and trades that have been deferred through recent times that will be imposed once the housing market is in full recovery.
The factor that makes all the difference, however, is selecting a builder that will give you an accurate and fully comprehensive cost for your new home up-front, detailing quoted costs and specifications.
It is important to ensure everything is included in the quote prior to signing documents and paying your deposit to avoid exorbitant price variations later.
You also need to ensure that you don’t undercapitalise when building a new home, as potential growth may be restricted.
Alternatively, if you moderately overcapitalise, which can be less risky, the market value of your property will eventually catch up to the realised value and surpass your investment outlay. Over the 5-10 year period that you reside in the home you will realise greater capital growth on your investment.
To discuss the right time to build a new house and home for you and your family, contact Malcolm Goode, Director / Builder / Designer, to arrange a free consultation.