2020 has not turned out to be the year we were all expecting however while the rest of the world is still grappling with coronavirus, New Zealand has been lucky enough to have eliminated any community transmission of COVID-19. While we are still expecting cases to appear at the border, the economy is already in rapid recovery, and consumer spending is up. What this means is that for the most part, New Zealanders seem to be optimistic about the second half of 2020 and this is great news for first time home buyers.
If you have already got your home deposit stashed away, now is the perfect time to be looking at entering the property market! While most first time home buyers would usually opt for purchasing an existing property for their first home, there’s never been a better time to look at building instead. Here’s a few reasons why you should look at building your first time rather than buying existing.
Interest rates have never been this low!
Unless you’ve been hiding under a rock you’ve probably heard that the bank’s lending rates in New Zealand are the lowest they’ve been in the past 20 years. The government know that stimulating the housing market is a critical part to our economic recovery and to help with this, in May this year the reserve bank has lowered the official cash rate or OCR to the unbelievably low figure of 0.25.
The OCR helps to influence your mortgage rates and we’re already seeing some great offers from banks and mortgage brokers with home loans advertised from around 2.65%.
It’s worth noting that this is the low point of the cycle however experts believe that rates will stay at a similar position for the next 6 to 12 months at least. This makes it the perfect time to get your home project underway!
Property developers are willing to do deals to move sections.
There are a lot of great sections currently available and developers haven’t been able to move things over the past 3 months. This means developers are likely to be open to doing deals to sell land. If you negotiate a good deal on your section, your overall house and land package is going to be more affordable and it’s going to give you more equity in your build at the end of the project.
Rental returns are more than mortgage payments.
One of the best parts about finance rates being so low at the moment is the fact that your average rental prices, especially in Auckland, are more than able to cover mortgage repayments. There are also likely to be more renters over the coming 12-24 months which gives you options at the end of the build. If you can gear your property with a good rental return, this may give you the opportunity to get a good head start on your mortgage repayments.
Our build project can happen quicker than you think!
One of the factors that put people off building over buying existing is the fact that you have to effectively cover mortgage repayments and rental payments during the build process. Most building companies will be open to providing turn-key solutions which helps negate this issue. Also new building process like prefabrication can allow the building project to be completed much quicker than typically possible which could put you in your home within just 3 to 4 months. It’s important to discuss these options with your builder prior to signing your contract!
Your home’s valuation is generally worth more at the end of the build.
In most cases when you’re home is completed, your homes valuation is typically worth more than what you’ve paid for it. There are many factors that influence your final valuation however we usually see a reasonable increase in the value of properties 12 months on from finishing construction. This is great when you come to renegotiate your mortgage with the bank
You get exactly what you want!
Finally and most importantly, when you build, you get exactly what you want. You’ll have a modern new home that’s protected by a new home guarantee. The home will have your personal touch with your choice of colours, characteristics and finishing touches, rather than inheriting someone else’s history. There’s nothing quite like walking into a brand new home that’s belongs to you!
Are you ready to get started – talk to the team at Framelink today to discuss your next home build!