The buying choice - existing family home or do-up?
As a buyer you have to ask yourself to what extent your head rules your heart or whether your heart rules your head. For when it comes to buying property this balance will play a large part in the purchase decision. This is especially true when it comes to the decision as to what type of property you decide to buy. There are essentially four types of property options in broad terms and each provides a solution that can suit your lifestyle and circumstances. Those options are a brand new home, a recent renovation / refurbished property, an existing property and then lastly a classic do-up.
In this article I will examine the first two of these being a brand new home and a recent renovation.
The new home option is in this country is something of a rare beast as in relative terms we do not build that many new homes. As compared to Australia or the UK for instance where new developments are more common with the ability to effectively buy a house amongst several dozen similar properties ready to move-in in a matter of weeks.
In NZ new builds tend not to be within a starter homes price range. The majority of new construction in this country is bespoke custom designed and built homes that tend to be priced above the median price. There certainly are group home builders who undertake developments and it is likely we will see more of these in the coming years as the pressure of supply to meet our growing population especially in Auckland triggers these players in the market. What we are likely to see is more higher-intensity developments of townhouse or apartment developments springing up in the suburbs bordering the inner city.
Buying a brand new home comes with pros and cons much as with other types of property. One of the most appealing is the concept of the fact that it is new - completely unmarked and pristine, just as with a new car. However there can be repercussions as there can be issues and problems that can arise as a function of it being a brand new property, you may find glitches or things that don’t work or are in the wrong place. Balanced against this will be a builders warranty that provides peace of mind that if there should be a problem then it will be fixed by the builder, not something you will find with an older home. Another appeal of a brand new home is the potential (if you are able to find one at a pre-construction phase) to be able to choose some of the fit-out details that suit you and your design flair. Potentially for the right negotiated price you could even request your own specification of fit-out in say the bathroom and kitchen or even the whole colour scheme. These decisions will naturally depend on the developer and builder and how accommodating they can be.
Buying off the plans, which is the concept of making a commitment to buy a new property before it is even built comes with pros and cons. Getting in early can be financially rewarding as developers offer incentives to secure commitment of buyers who by that commitment secure the development costs with the bank or financial underwriter, this will require a deposit which not only assists with the cashflow of the developer but also ensures your commitment. Set against this is the timing issue. You have a notional completion date which could vary but is usually sometime in the future anything from 6 to 12 months. This can again play to your advantage or disadvantage, it allows you to plan in advance the move and purchase thereby get your existing house in perfect condition or make the financial decision you may need to make, but against that is the frustration that you cannot move when you want and thereby having to wait a year can be a major negative when you may find your situation and circumstances may change in the intervening period. Having mentioned the financial appeal of getting in early in a new build development it is also worth pointing out the potential of being one of the last to buy-in to a development. With the last few properties a developer may well be looking to close out their business and having unsold properties may be costing them so they may offer incentives to sell quickly, especially if the development is complete. So in many ways it can pay to be an early-bird or a late decision maker when it comes to new builds.
Turning from new builds to look at recent renovations. Whilst there is no objective data on this subject there is a sense that we see more of these properties come onto the market these days. Properties that have been so extensively renovated that they almost amount to a new house. This is certainly true in Auckland and is in some ways a by product of our historical housing stock. We are fortunate to have a housing stock of properties built pre-1960’s that have endured well through solid construction matched to structurally simplistic construction.
Take the classic villas and bungalows or the state houses of the 1940’s & 50’s - solid timber frame built of ageless hard wood which if adequately maintained can last many lifetimes. A complete renovation often encompasses re-piling, recladding, rewiring, re-plumbing, re-roofing and internal lining and insulation. Add to this modern bathrooms and kitchen with the added touch of refurbishment of period details and you often have what amounts to a new house. Clearly such an extensive construction project comes at a price but what you get is character and modern convenience in a popular suburb where a brand new home could not be possible. The appeal of such complete renovations seems almost insatiable as seldom do such properties stay on the market for long. In terms of risks in buying such properties, the main risk is financial as they tend to command higher prices than the median in the area so paying too much could be a risk. Less of a risk these days (although never to be discounted) is the building work.
The changes to the Building Act and the compliance changes in the industry over the past 12 years has required ever more diligence on the part of builders to ensure quality of work coupled with strict adherence to code compliance through local authorities which requires sign off through all the critical sections of the work.
So when it comes to looking to buy a brand new home with all the inherent benefits it brings, there are options that suit your design requirements, location and budget. As ever good research and seeking external advice of a registered valuer and a building inspector will remove many of the headaches and uncertainty to give you peace of mind for your new home.
Next article examines the decisions around buying a regular ordinary home or the challenge of a do-up