Read time: 4 minutes, 03 seconds. Buying a home is a big decision. For first-time buyers, making such a large investment can be overwhelming. Especially, if you have no idea what to look for when...
Why New-build Can Help You Get Into The Property Market Sooner
The RBA recently announced the decision to stand firm at 0.1% for the interest rate. So even with the rising house prices, people can still take advantage of the property market.
Right now, many new developments are being done in residential areas. Since the Covid-19 outbreak, the property market has taken a strong turn toward residential property. The central business districts (CBD), nowadays, are struggling to compete with residential demand.
The reality is that with demand rising, the country has to match with supply. So that’s why, currently, most new developments underway are for residences. Plus, some sites are being converted into residencies.
“More expansive supply will help – but in the face of a large increase in demand, it will only help. It will not eliminate the increase in house prices.” – Luci Ellis, Assistant Governor, RBA
As a result, there’s some buzz surrounding the various new developments. So most first-time homebuyers and investors want to be among the first to buy. If you are wondering why, there’s a lot you need to know.
The new-build price point
Many new developments are happening throughout the country. Between July and September, development costs rose by nearly 4%.
“The quarterly rate of growth in construction costs is happening everywhere and is not restricted to one city or state, it’s a national trend.” – Tim Lawless, Research Director, CoreLogic
New-builds generally have a lower asking price than an established property. When the first set of properties is being sold out of a new development, the price is not yet final. This is when the developers test the market. They’re trying to see what people are willing to pay and what they can comfortably ask for. Additionally, developers price new-builds lower to get a couple of houses sold quickly. If houses from a new development are being sold quickly, the public is more attracted to it. Then, once there’s enough interest, the prices start going up.
With the help of MLS Finance and our extensive partners, we can alert you to upcoming new developments so you don’t miss out.
Tenants love a new-build
New-builds are also more attractive to tenants. People get more excited to move into a brand new place. Being the first to live in that space makes it feel more special. Plus, tenants are willing to pay higher rent for new houses and apartments. So when you think about it, you could get settled in the real estate market faster with a new build.
So let’s say you get your hands on a new-build at the lower starting price. Then, you attract a tenant who is willing to pay higher rent for a brand new property. You can pay off your mortgage early. Plus, with the historically low interest rate right now, you can clear off a good bit of debt before interest rates start to rise again. Bear in mind though, it could rise again before 2024 as was originally predicted.
Getting a house and land package
A house and land package lets you select a plot, choose a design, and have it made for you. This takes a lot of the heavy lifting off your plate if you have a custom home design in mind. You will find a lot of these types of developments in suburban areas.
While it’s great to have a say in the ultimate design of the property, you also want to make sure the area itself is attractive. For example, a lot of tenants would care about things like whether a school or business centre is nearby. So check out the area to make sure it also helps to sell your new property.
Building on land you bought
Getting in the property market sooner also means going at your own pace. While many lenders can merge house and land prices, you might still need to get a loan for each. However, if you simply get the land first, this property will still appreciate even if it is vacant. Then you can start building on it when you are ready.
One huge advantage of doing it this way has to do with the stamp duty. Depending on the territory you’re in, you may only be required to pay stamp duty on the land itself. So when you finally start developing, you won’t need to pay stamp duty on the structure erected.
Many advantages can come from getting your hands on a new-build. This is especially true if the entire community is a new development. However, the same is true for communities that are just getting a facelift.
If you get a property in a community that is undergoing gentrification, you can benefit from the new house prices. Once newer developments start popping up in an area, the value of older property will also increase.
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