Build or buy a new home?
Whether you're looking for a first home or an investment property, there are many tough decisions to make when exploring the property market. One choice in particular that people are commonly torn between is purchasing an existing home or building a new one from scratch.
For some, the idea of buying an older home can mean charming character features, stability and the assurance of seeing it before you commit your money. However, for others, they may look at it and see a headache - the risk of leaking pipes, not enough powerpoints and roof that will soon need replacing.
If you’re stuck between the two options it’s helpful to explore the advantages and disadvantages of both. In this blog, we compare the building and buying process to help you make a decision that best suits your circumstances, budget and lifestyle.
Buying an existing home
While there were fears that the Covid-19 pandemic would result in an economic downturn and plummeting house prices, New Zealand saw the opposite. Soaring house prices did not put kiwis off from achieving their home ownership aspirations and these results have continued in 2021, with 7,964 new home purchases in the month of February 2021 (an increase of 14.6% compared with February 2020, according to REINZ). So what makes buying an existing home so popular?
An established suburb often has a charming feel that appeals to many, with varying house styles, well-grown trees and local connections. However these existing neighbourhoods in central areas are typically heavily built-up with limited available land, therefore if you want to get into these sought-after locations buying is often your best bet. Here you can opt to purchase a property in one of your preferred suburbs, near available amenities like schools, shops and community spaces. Purchasing an existing property in an established neighbourhood is a fast track to life in a community.
Move in date
Once you’ve signed the contract for your new house purchase, your settlement date is decided and you can plan the move! As the house already exists, any delays to your settlement date are rare. Building a new house can typically take between 6-12 months, and then construction delays are also common due to the weather, material shortages or other jobs running overtime. If you’re building in a new development, construction may not be able to begin until more of the sites have sold, causing further delays.
During this time you may still need to be paying rent while waiting for the house to be liveable, so you’ll have additional expenses. In contrast to this, when buying new you can be living in your home or renting it out from settlement day onwards!
With Genius Homes, each prefab home is constructed in a purpose-designed factory which speeds up the build, streamlines processes and eliminates external disruptions. Once your plans have entered the production line, the building process to site delivery will typically take around 10 weeks and there will be an additional 4 weeks of on-site work until the keys are handed over.
Buying an existing home is commonly the preferred option for obtaining a new property as it can prove a more cost-effective solution for some. As DIY home-improvements are popular in New Zealand, many opt for a cheaper house that needs a lot of work done in order to be able to get on the property ladder and add value through ‘sweat equity’.
Construction loans are typically more complex than regular home loans, as there are more unknown factors when building new, therefore the risk for banks needs to be minimised. However, with the housing stock being at an all time low, the government is offering incentives for those interested in building new. Subsidies such as the $10,000 through Kiwisaver’s First Home Grant make building a new home an attractive and achievable alternative.
Quirks and character
Although you can add personality into a new build, the original character of an older house can often not be replicated. While these quirky features may not be everyone’s cup of tea, they provide a unique charm and can create a more “homely” feel.
Once you make an offer to buy an existing home, there’s also the advantage of knowing exactly what you need to pay with no additional fees. With construction costs commonly changing during the process and extra work exceeding the budget, the stable, fixed price of buying an existing property has added appeal. However, while the construction process can be perceived as expensive or unreliable, Genius Homes offer an affordable, stress-free solution. The prefab designs and factory-build process reduces the overall build costs and prevents any unexpected fees or delays.
When buying an existing home, you are able to visit open homes or private viewings and get a feel for the property. Walking around the home makes it much easier to envision your life there - you’re able to see how the sunlight falls, where your furniture would go and the views captured out each window. Getting a good understanding of the space before you make an offer and commit your money means you can feel more confident in your decision, as a lot of the uncertainty is removed and you know what you’re in for!
This can be achievable even with a new build home. Visiting the Genius Homes factory enables you to see the scale of some of our plans and understand if you’re looking at the perfect plan for you. If you would like to book a tour of the Genius Home factory in Timaru, you can check out both production lines and the homes ‘in build’. There are usually between 10 - 12 houses at different stages of the building process which can be viewed, to help you get a feel for the process.
Building a new home
With Real Estate Institute (REINZ) recently reporting that median house prices throughout the country had risen by nearly a quarter in a single year, from $635,000 in February 2020 to $780,300 in February 2021 and a significant shortfall in housing supply, it’s easy to see why many New Zealanders are turning to building as a way of cracking into the property market. Whether you choose to build a kitset home, prefab home or opt for a house-and-land package, what are the advantages of building from scratch?
You’re in control
The best part of building a new home is that it can be chosen specifically for your family and lifestyle, within your budget constraints. Even when you have chosen a pre-set floor plan you can typically make changes to suit your requirements, such as extending it for extra family members or to allow for your hobbies. You can also opt to add some of those features you have always dreamed about to your new home, such as a walk-in-robe, kitchen island, outdoor living or an ensuite. Building new provides a tailored solution and ensures that your home will be comfortable, practical and fit-for-purpose. For help choosing the perfect house plan, check out this other blog.
Buying an existing home may mean that you end up with a dated bathroom, less space or a property that has had an extension added on, resulting in an illogical layout. Older homes also tend to be more closed off, whereas open-plan living is now increasingly popular. Renovations and changes that you plan to make to improve the space may be timely, expensive, or uncover further work that needs to be addressed. Renovations cost more per sqm than a new build, as they are more complicated to design, get consent for and build.
Warmer and healthier
As construction methods and materials have evolved so much over the years, new homes tend to be far better insulated, warmer, drier, and more energy-efficient. With a new build you know that the current New Zealand Building Code has been followed throughout the process, ensuring a safe, healthy and durable home. A modern home’s energy-efficient design will typically result in cheaper utility bills, as well as being more environmentally friendly.
Avoid expensive repairs
Older homes can often have issues such as a leaking roof, blocked pipes or rotting frames, which may require expensive repairs and upgrades. That beautiful pōhutukawa tree in the garden may have its roots winding their way to your pipework creating a ticking time bomb of repairs. While you may be notified about some of these on your building inspection report at the time of purchase, others may pop up overtime creating an expensive surprise. With a build, new materials and best practices are being used to deliver a modern, reliable and durable home.
At Genius Homes, all stages of the building process are completed in a factory environment under strict supervision to ensure your new home is built to the highest quality standards, therefore a guarantee on the workmanship and materials can be given. Each building is engineer-designed with a strong steel sub-frame and high-quality timber framing to ensure they exceed building code requirements and have a 50-year steel frame structure warranty. For added assurance and extra peace of mind whilst you settle into your new home, you are provided with a 24-month Maintenance Guarantee.
Whether you build from the ground up or buy an established home that is ready to move into, both paths to home ownership have pros and cons. Buying an existing home may seem cheaper in the short-term, however, there will often be existing repairs and maintenance required that will be more expensive over time. Building a new home may mean that you compromise on a central location and original character, however, you gain a modern, comfortable and long-lasting solution that is designed specifically for you!
If you would like to explore the option of building with Genius Homes, please feel free to contact the friendly team for a chat. Alternatively, you can download the Genius Home Catalogue to check out the diverse range of prefab homes we offer.