With everything going on, is now a good time to build a home?

It’s tough making big life decisions (like building a home) in times of uncertainty. And after 2020, it’s completely understandable if you’re feeling a little uncertain about everything!

Despite all that, 2021 could actually be a great time to build a home. Here’s why. 

The property market is running red hot

Your new home should be a great place to live but it should also be a way of growing your wealth though capital gains. That means it’s usually a better idea to build when house prices are likely to increase in future. 

Despite predictions of a price slump, 2020 was a near record-breaking year for NZ and Auckland house price growth. From November 2019 to November 2020, the national median house price increased by 18.5% from $632,000 to $749,000 (REINZ). During the same period, Auckland’s median price topped $1 million with a 16.4% increase. 

Industry experts are expecting prices to continue to surge through 2021, with Westpac’s chief economist Dominick Stephens forecasting a 12.2% median price increase. Both ANZ and ASB’s senior economists also predict similar growth during the same period. 

What does this mean for home builders? If you build a quality home in a good location, you could enjoy huge capital gains right off the bat.  

Interest rates are lower than EVER

The biggest cost of building and owning a new home (except for the cost of construction and land) is usually mortgage interest. Lower interest rates make owning a new home more affordable, shrinking the size of your repayments. 

This is one of the biggest reasons why now is a good time to build – at a time when mortgage interest rates are lower than they’ve EVER been. The average one-year fixed rate from major

NZ banks is around 2.5%, with Heartland (1.99%) and Westpac (2.29%) offering even lower rates.

What’s more, economists expect rates to continue to decrease in 2021 and to remain low for the near future. 

Homes are still in short supply

One of the main reasons why house prices keep going up is because Auckland simply doesn’t have enough properties to meet demand. In 2018, the shortfall was estimated at 34,150 homes, according to interest.co.nz. 

In 2019 and 2020, the construction industry built a record-breaking amount of homes and decreased that shortage by almost 3,000 dwellings. It’s a start, but a shortage of over 30,000 homes still remains. 

For Kiwis building homes, that means the shortage should continue putting upward pressure on prices, helping the value of your home continue to grow in future.

Building when the time is right for you

Regardless of what’s going on in New Zealand, the best time to build a home is when the time is right for you. That means you are:

  • Financially stable with a reliable income. 
  • Can afford the necessary deposit (usually 20% of total land and construction costs). 
  • Are at a stage in your life when you’re ready to commit to paying a mortgage for the foreseeable future and want to live in your own new home. 

If the time’s right for you, 2021 is a great time to build a brand new home. Give Golstruct Homes a call to talk about your next home today.