The New Normal
On reflection, I think most people can agree that the events which unfolded in 2020 were unprecedented in so many ways.
With so much changing in the past 12 months, it can be hard to acknowledge what is normal, and what is still dynamic, or changing. However, most Kiwis have now settled into a regular rhythm, albeit very different from their rhythm a year ago.
What does this new normal look like for 2021? Every month, thousands of Kiwis return home and need a roof over their heads. Median house prices have increased by over 16 per cent in 2020. Fixed mortgage rates are available from only 2.29 per cent. These figures are the new normal. Money is relatively cheap; however, house prices have increased, along with demand.
With unprecedented demand for existing homes, this also means the same for sections to build new houses on. I cannot recall any point in time prior to now, where there were so many large scale subdivisions sold out in Canterbury. Where we once had the luxury of choice, clients are now limited in availability. The ‘new norm’ sees sections advertised as “currently available”, with individual section titles that are many months away from issue.
Don’t be afraid! Buyers considering building a house, are now waiting six to twelve months for their land title to issue, before the builder can break ground and start constructing the house. It’s a minimum 12 to 18-month timeframe from start to finish, from contract signing to moving in.
All is not lost though. Two very important points need to be recognised that only time can deliver. Firstly, buyers will get more time to critique the build, the specification, and the plan. More time to get it right, plus more time to save money to add additional features to the house to suit individual needs. Secondly, and very importantly, we are seeing buyers experiencing capital gain on a house that they have not yet fully paid for, are not paying rates on, or paying insurance on.
Building a new house with today’s prices, and not having to fully pay for the house for 12 to 18 months, means you are exposed to capital gain – an increase in the house’s value – even before you've moved in!
Savvy investors recognise this advantage and are snapping up build slots. Don’t look at the new norm as a negative, just because the land doesn’t have the title issued. The positives are plentiful, you’ll just need to take a breath and wait it out a little longer than before.
Embrace the new normal – we all want to live in a special place to call home.