If you are in the market for a home, it can be very hard to find one with all the features you require. Building a new home could be just the ticket. Also the Reserve Bank changed the LVR restrictions by making residential construction loans exempt from over 80% LVR restrictions in December last year making it even easier if you don’t have a 20% deposit. Find out what you need to know about starting from scratch…
Start with location
One of the strongest motivations for building your own place is the ability to choose a piece of land in a location that suits you exactly. If you have spent hours looking at properties that you like which are in an area that won’t work for you, then you will understand the attraction of first choosing a location where you can put down roots and do things your own way. Note: A typical 400 – 500sqm section in Newlands might cost around $100k – $150k depending on how flat the land is. Sections in Johnsonville can cost a lot more if they are close to the shops and have potential to be developed.
A big time commitment
With a poor supply of existing houses in many areas these days and the constant competition of other potential buyers pushing up prices, building is a viable option if you have the time and patience for it. It is a very long process which starts with choosing a construction company, working on or choosing house designs, obtaining consent, deciding on colours, materials, size and layout, fittings and many other features.
The appeal of a brand new house with a perfect, undamaged finish and efficient heating, cooling and insulation systems can be somewhat offset by the fact that there can be teething problems with any new piece of construction. While the completed house will be under warranty, it is still annoying to have things that need fixing or finishing.
While some companies guarantee a finish date, many cannot make this claim. It is usual for construction to take weeks or months longer than planned, so it is wise to expect delays before everything is finally signed off and all the details have been attended to.
Check out whether or not the building company is working on several projects at once or if there is a team of builders dedicated to your property. Frustrating delays can occur if workers are spending time on other projects while your deadline stretches ahead indefinitely.
Watch your budget
Your costs can easily increase if extra features are added to the original plan, if you become seduced by beautiful materials and fittings and choose to spend more on them, or when the Council specifies certain things that need to be done before giving consent. A building budget almost always needs to be bigger than originally planned.
Economic factors have an effect on prices. It might be wise to buy the land and then wait for the right time to start the building process. For example if petrol prices are high, transportation of building materials costs suppliers and construction companies more, so the increased costs are passed on to you. If you can wait until a time when building industry prices are lower, you can save a significant amount of money.
The problem with spending too much is that you could end up with an over-priced house for the area you have chosen. When it is time to sell it, you might want more for your house than what buyers are prepared to pay for similar properties nearby.
If managed well however, you will often end up with built in equity once you have finished your build (eg. a home worth more than your total cost of building + section)
A long-term project
Building takes planning, time, patience and money, and it is notorious for being a stressful process. If you can be organised, choose the right time to do it instead of rushing impulsively, view it as a long-term project and be realistic about the time and money involved, you could find it a rewarding experience with a wonderful outcome – a bespoke home made just for you.
Source: Sarah Johnston (Mortgage Express)
Till next time,
THOUGHT OF THE WEEK:
“The factory of the future will have only 2 employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment.”
– Warren G. Bennis, USC