Buying a new-build home that's either completed or off the plans can be daunting, but doing research will help buyers make the best decision, experts say
Introduced in March to address the housing crisis and assist first-home buyers, the Government housing announcement included a $3.8 billion fund to 'green light' new-build supply. From April 1, price caps applying to the First Home Grant and First Home Loan increased in 'target areas', allowing greater incentives to those buying new-builds.
In May, ASB introduced a special 'back my build' rate of 1.79 percent. In June, ANZ undercut ASB's rate, revealing its 'Blueprint to build' rate of 1.68 percent.
Given these incentives, and as they're often higher-density on smaller blocks of land, buying a new-build may be more cost-effective than an existing home.
But is this such a good idea?
Jeremy Cox, licensed building practitioner and property inspector at Your Property Inspector, said when buying a completed (also called a 'turnkey') home, buyers are paying the market value on the day.
Compared to older existing homes, they're generally low maintenance.
"Materials are evolving, getting much better over time with new methods and regulations which protect the purchaser from poor workmanship," Cox said.
Ray White salesperson Rick Mozessohn said buying off the plans may allow those with lower deposits (5 or 10 percent deposit) to buy sooner. Property prices went up 28.7 percent over the last year, according to REINZ. Assuming prices keep rising, buyers may decide it's better to lock in a lower price now.
"They can potentially buy something that, by the time the property is complete, the market might have moved upwards," Mozessohn said.
But as there are risks, Newshub asked Jeremy Cox and Rick Mozessohn five things buyers can check before signing an agreement to buy.
1. Get a pre-purchase inspection
A pre-purchase inspection is where a builder does a thorough check of the house, providing a written report.
Cox said as it provides "a fresh pair of eyes" getting an inspection is wise - even if the home is new. Bear in mind the bank and insurer may require one before providing a mortgage or house insurance.
"Things can change after the final Council inspection and before it goes to market, (for example landscaping, concrete paths and/or garden beads are too high against the cladding)," Cox said.
2. Check for potential delays in completion
When buying off the plan, the current shortage of both building materials and labour could push the completion date out.
Cox suggests talking to the builder (and/or developer) and checking the time frame. This is particularly important for people selling and buying, or who plan to give their landlord notice.
"Be prepared for this: do your homework with your builder as you may need to allow extra time," Cox said.
Mozessohn says buyers can also check the developer's track record.
"[Ask and] look at previous projects they've done, see whether they've stuck to their delivery and whether they've had any issues," Mozessohn said.
3. Check the neighbourhood plan
Before buying a new-build as a sub-division, it's important to research the plan for the neighbourhood, talking to developers, builders, the real estate agent and local Council.
"For example, you may move into a subdivision and you think you are in a quiet street, then discover another area is being rezoned and they have to drive past your property to get to it," Cox said.
4. Check the home's location on-site
Before buying, it's a good idea to check how the house is positioned on the site, as this will affect light and warmth.
"For example, where does the sun rise and set, is it on the right side of the street, how early does it lose the sun, is it on a hill and are the trees shadowing the property," Cox said.
5. Check transport routes and local amenities
Check access to public transport, amenities such as a dairy and supermarket, and which schools the property is zoned for (if this is a consideration).
"Check transport routes, ease of getting to work or school and whether you can walk to your required destination," Cox suggested.
Those buying off the plans and concerned about potential delays can talk to their lawyer about incorporating a 'sunset clause' in the Sale and Purchase Agreement.
"[It's] a clause that's effectively saying if the development hasn't been delivered and completed by 'x' date, the purchaser has the ability to re-negotiate or pull out of the contract," Mozessohn said.
