South Island house and land packages: Things to know

by Genius Homes

With demand continuing to outweigh supply in the New Zealand property market, we see house prices at an all time high. As a result, many potential buyers are turning to building a new home as a way to get on the property ladder or increase their portfolio. Home and land packages offer an inclusive, stress-free option, however it’s important to carefully consider if this is the right solution for you.

Despite all the challenges that came with the Covid-19 pandemic, the nation has not been shying away from buying and selling property and it is still perceived to be a safe investment for both first home buyers and investors alike. According to Stuff, nearly 25% more people were on the hunt for property in 2020 than there were in 2019. These search figures are at a five year high, with the most significant areas of interest being South Island based. The Nelson and Tasman regions were up 46%, followed closely by the West Coast which was up 39%.

This skyward demand for property stems from a combination of historically low home-loan interest rates and the Reserve Bank’s removal of the loan-to-value ratios (LVRs) in the aftermath of the Covid-19 pandemic. And while LVRs have been reinstated, with residential home purchasers needing a 20% deposit and property investors 40%, an exemption exists for people constructing a new home, regardless of whether they’re investors or not. The removal of the overseas holiday spend has also added pressure through a flurry of renovation and building activity. 

Pairing this increase in demand with a shortage in available property has resulted in soaring house prices. Vanessa Taylor from realestate.co.nz confirms that average New Zealand property prices in 2020 were $775,976, up 10.7% compared with the year prior. These results are continuing throughout the nation in 2021 too, with Christchurch having its highest rate of monthly house price growth in 17 years this January. The garden city had long been known for its stable and moderate property prices, popular with first home buyers.

Because of these factors, the financial reward from building new, once reserved for ambitious developers, is something now appealing to both the humble first home-buyer and seasoned property investor. If you talk to any tradie they will confirm that construction has taken off lately, with a surge of jobs in the industry.

It’s looking to be a busy start to the new year too, with Statistics New Zealand recently confirming that 11,291 new homes were consented in the final quarter of 2020, beating the previous record set in 1973. In the South Island, this substantial growth in new dwelling consents was primarily driven by the Tasman and Canterbury regions, which were up 10% and 11% respectively compared to the year prior. 

Smaller alternatives such as new townhouses, flats and units have grown in popularity and are now making up nearly a third of all new home consents nationwide due to their affordability. House and land packages have also increased in popularity, as they are a convenient way to create an investment portfolio or break into the property market and achieve the classic kiwi home-ownership dream.

A house and land package is a deal where the buyers purchase the land and build a new house on it with the same developer. Combining the purchase of house and land has cost-saving and logistical advantages, offering the opportunity to have a new home at an affordable price. However, while having your house and land sorted together seems to take the stress away, we have compiled a list below of things that you should consider before signing the contract!

Cost of house and land packagesProcess Simplicity

While building your own customised home from scratch can sound appealing, once you get the ball rolling and numerous parties involved, such as architects, the council, site developers, builders and contractors, it can become a daunting task. An advantage to a house and land package is that they provide a convenient solution by streamlining the process. A dedicated project manager will usually be your main point of contact from planning to completion, removing lots of the stress that comes in coordinating your own build.

It’s worth noting, however, that by going through the same company for the purchase of the land and the design and build of the house you lose the ability to control costs. Markups can occur at the land level, finishing and labour parts of the process meaning you’re possibly paying more than if you were to view each in isolation and negotiate with the seller directly. By buying your own section and finding an affordable housing provider you could save enough for a kitchen upgrade!

Location & Community

As the developer will typically buy larger sections to complete multiple home and land packages in one area, a disadvantage to these is that you’re limited to these specific locations. These packages also tend to be in new subdivisions away from the city centre, as the available land is often on the outskirts of town. It’s important to consider if these developments have suitable amenities and community facilities for you and if you’re happy with any required daily commute.

While these modern subdivisions tend to attract many like-minded families, living in a new development isn’t for everyone. Many prefer the quirks of an existing neighbourhood that comes with established trees, local connections and varying house styles. If you are planning on renting or selling your home in the near future, carefully consider the appeal for others too. Most people prefer to live in an owner-occupied area, rather than one that is popular with investors and tenants. 

It’s also worth bearing in mind that sections don’t always sell at the same time, and construction can begin on houses long after early investors have settled into their homes. Alternatively the developer may be waiting for all sections to sell and builds to be confirmed, which might mean you could be waiting a while for your new home. Buying a section yourself and having a prefab home built for you means minimal disruption for your neighbours as the house is constructed elsewhere and delivered to your site almost fully complete.

Land Size

As developers typically want to maximise the potential of their land, the section sizes are often reasonably small. If having a large backyard or privacy from your neighbours is a priority, it may be best to find your own piece of land to build on. 

Even developments where the house element is only an option and you can find your own builder there are often strict covenants. You might not be able to build the home of your dreams due to neighbourhood restrictions put in place by the developers.

Financing 

House and land packages typically make arranging finances easier. As it comes as an inclusive package, you tend to have a fixed budget from the beginning of the process which banks prefer. Also, due to the simplicity of the project and as you’ll usually be working with an experienced property development team, it’s unlikely that the project will go significantly over time or budget. These benefits are also recognised when building new with Genius Homes, as your contract will include a set price and timeframe which keeps your bank manager happy!  

Suppliers & Choice

If you’ve got a specific vision for your new build, a home and land package may not be your best solution. While you’re typically able to make some adjustments to these pre-set plans, you aren’t able to design a home from scratch with all the unique touches you have dreamed of! 

You’re also limited with options when it comes to the tradespeople too, as you may have an established relationship with another builder or electrician that you’d like to use for your new build, but you are contractually obliged to use their provider. And while the same is true of prefab homes this generally causes less of a problem. As we’re based in Timaru your local builder wouldn’t be missing out on a local job, however they’re more than welcome to come and visit our factory if they want to understand the prefab build process and see what all the fuss is about!

Construction Delays

The building industry has been struggling to keep up with the recent surge in demand, as it has come at a time when the industry was already facing a shortage of skilled tradespeople which has been compounded by the lack of migrant workers. While there is now a record number of apprentices in New Zealand due to the government’s new training scheme, the benefits of this output will not come into fruition for another few years. 

On top of this, building companies are also facing difficulties sourcing materials. Shipping delays as a result of the Covid-19 pandemic paired with high product demand has also resulted in supply shortages on critical materials.

Due to these pressures, the construction industry is facing large project delays. Those who are wanting to build a new home have been commonly getting turned away or told that they will need to wait a few years before these can get underway, including home and land packages! 

However for those wanting to jump the queue, Genius Homes are able to provide an alternative solution. A brand new prefabricated home can be built and delivered to your site in the South Island in as little as 12 weeks, once construction begins. If you’re interested in a house and land package but aren’t interested in the wait time and restrictions that come along with it, get in touch with us today. While we don’t offer house and land packages we are specialists in the house part, leaving you to find the perfect section and us to worry about the build.

If you find a site or your choice and secure the land, Genius Homes can take care of the rest! We’ll work with you to build your brand new home and deliver it to your site on time. Download our latest product catalogue of prefab homes today by clicking on the link below to discover a design suited to you.

2021 Genius Homes Brochure download now

filed under Building Options

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