While deciding on whether to buy or build a house is always a tricky path to navigate, global events may influence your choice now more than ever.
Home ownership is generally considered as one of the key pillars to wealth generation here in Australia, but which path you opt to take as a means to get there is entirely up to you. If you’re in the process of weighing up whether buying an existing property or building your own from scratch is the better choice, unfortunately there’s no clean cut answer.
While both have long lists of pros and cons attached, such as time, customisation and general affordability, there are also a few new variables that will require the attention of buyers and builders alike.
The Case For Buying Or Building Property Next Year
Designed to be a leg up for the building industry during the height of the pandemic in 2020, the HomeBuilder scheme aimed to provide eligible owner-occupiers with a grant to build a new home, substantially renovate an existing home or buy an off-the-plan home/new home, causing a surge in demand for building materials.
Combined with other federal and state government incentives such as the First Home Owner Grant and the early release of superannuation, the Australian construction industry suddenly found itself experiencing too much of a good thing. As a result, even now homes are taking twice as long to build due to increased demand, timeline blowouts thanks to ongoing lockdowns, and the building materials shortage that the entire world is currently experiencing.
For builders, the shortage means higher costs for the limited access to materials. This is then compounded by pandemic related shipping and transit delays, and by the time the builder finally gets his or her hands on the goods, they may already be liable to pay daily fees for not completing jobs by the contracted date. For consumers and clients, the frustration is further aggravated by having to unexpectedly fork out for rental costs if their home is unliveable thanks to new build or renovation delays.
Steel, fibre cement and timber are just some of the significant shortages that the Australian construction industry is grappling with. On average, builders in Victoria are reporting wait times of 10-12 weeks longer than usual, which may also help to explain why many buyers are sticking with purchasing established homes as a means to speed up the transaction process.
Although Australia’s property market is currently running hotter than ever, experts are also optimistic that the height of the boom is soon to pass. However, the Reserve Bank of Australia governor Philip Lowe has also indicated that until inflation and wage growth stabilises, an interest rate hike is unlikely to be seen before the end of 2023. For buyers debating whether it’s better to buy or build in 2022, all of the above factors should be taken into consideration before settling on what is likely to be the right fit for their own individual circumstances.
Before you even think about proceeding with a new build or start making offers on existing properties, it’s important to have your finances in order. In particular, many first home buyers make the mistake of defaulting to their existing bank’s loan products without doing their research on alternatives with better terms or interest rates, so this is when the help of a mortgage broker can be invaluable.
How To Navigate The World Of Property Finance
The big attraction of buying or building your own home is just that – it’s yours, once you’ve paid back the banks of course. Apart from having somewhere to live, the quest for home ownership is also about having a long term investment strategy. If we’re looking at it from the viewpoint of decades instead of months, generally house prices do rise, and so does the value of your investment.
Buying or building your first property is also one of the first steps of building wealth, as the equity in the home will usually allow you the opportunity to access further loans if that’s what’s on your radar, such as shares, a managed fund, or even a second investment property.
However, entering the market as a first home buyer isn’t always easy, which is why we’ve compiled our very own in depth First Home Buyers Guide. This resource is completely free to download, and can be a game changer when it comes to ensuring that you’re up to speed on streamlining your first home purchase.
With a background in banking, finance, business development and project management, there’s no better advocate to have on your team than Nikki Berzin. As a fully qualified mortgage broker and director of Cherry Lending & Finance, Nikki is passionate about all things finance, and empowering her clients with the tools to hit their property goals is what she does best, and another example of this is the free to use Savings Goal Calculator found on the Cherry Lending & Finance website.
If you’re looking to get into your first home, purchase an investment property or even want to look at your options for refinancing, the first step is starting the conversation. Get in touch with Nikki today, or call her directly on 0427 374 155 to bring your mortgage dreams to life.
Disclaimer: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product. Subject to lenders terms and conditions, fees and charges and eligibility apply.
Credit Representative 499652 is authorised under Australian Credit License 389328.