NZ 1st homebuyers are ScReWeD...

[POSSUM THE CAT]

MiniMoke are Cantabrians mugs Some building companies advertising $1400 a square meter to build in Auckland wich is supposed to be the most expensive place to build in the country. This also seems to reduce if building is over 250 square meters

[minimoke]

MiniMoke are Cantabrians mugs Some building companies advertising $1400 a square meter to build in Auckland wich is supposed to be the most expensive place to build in the country. This also seems to reduce if building is over 250 square meters

Well Auckland (the most expensive region) is at $1,790 a sqm for a small house (145 sqm) and $1,512 for a large house (202sqm house). The data comes from construction cost consultants (not anecdotal urban chit chat) and is relied upon as a guide by govt agencies. They are estimated average costs taken off a set of plans (which provide reliability to the bi-annual movements) so you will of course find cheaper – and if you want an architecturally designed home, more expensive. Costs are for materials and labour as well as contractor overheads and margins. They include internal and external finishes to meet the Building Code and standard appliances – but don’t include carpet.

[minimoke]

True MM, but those figures are historic, and there is plenty of anecdotal evidence around in the buliding industry at present (at least in Canterbury) that suggests that the real problems are starting to kick in.
It's a very different landscape out there at the moment than it was even in July 08. Look at all of the home building companies offering discounts and incentives at the moment.

If you dig a little deeper I think you’ll find the building industry saying that they aren’t building as many homes at the moment as they were say a year ago, and that they aren’t seeing as many plans going through for consent. But it is unlikely they will be saying overall construction costs are going down. Sure – they might be discounting their labour but you still have to pay the same council increasing fees and material costs are still going up. Perhaps not as dramatically as they might have been but with a CPI currently at 5.1% costs have to be going up across the board. They might even be scrimping on building quality and materials to drive a lower price but that is purely supposition.
The Housing and Household Goods CPI went UP. In fact prices for new housing went UP 1.3% in the September quarter (UP!!! Not down). These are put down in part to changes in the Building Act – driving quality (and cost) UP. New House prices are UP 4.6% on last years September quarter.

Facts are telling us that prices are going up but gossip over the tea cups tells us prices are going down. If you hang on long enough you might be able to point to a decrease but at the moment the evidence is that costs are UP.

[duncan macgregor]

First home buyers are now facing a huge hike in required deposit. Average cheap home in Christchurch requires $62000 deposit according to the news tonight. All the smart people in that group would have bought by now, the rest will have to keep saving hoping to catch up. More people renting higher rents in the end leading to increased poverty. Decrease in building will only inflate the property prices eventually those not in the market might never save enough to get on the ladder. That was the first thing i told my kids buy a house and take your deposit back out after three years, and buy another house.
The window of first opportunity to get into property is now closed, so pointless talking about prices. Macdunk

[Crypto Crude]

hey mack dunky,
do you not realise that increased required deposit will also put downward pressure on house prices...

add in existing downward pressure...

man... its that simple...
Serpie was right last year... I did not have to look at a house in chch over 250k... effectively I only needed 200k, that will now roll out into the gutter for 150k maybe 140k when this is over....

are you saying mackdunk, that I should have been prepared to buy a house for 200k when its only worth 150k just so I can get a mortgage for it...
hehehehe.... come on mackdunk...I can buy a house whenever I like...
when I first posted I said 5 years wait to buy...well we are 11 months into the downturn... Ive readdressed the situation and reckon ive got another 1.5-2 years... enough time to save for two deposits, including the money Ive already got on the market... and then the chance that my investments perform for cream on the top.....
Dont tell me It cant be done... tell me how it can be done...
isnt that what our mate joeking told us...
"Dont find reasons why you cant invest, find reasons why you can"...
quote unquote... I rest my case for the moment...

.^sc

[POSSUM THE CAT]

Mini Moke just read the Auckland Papers and advertisements of actual prices are more accurate than averages And the company getting the home builder of the year award is one of the cheapest. Of course it is a standard design home This Is a GJ GARDNER HOME a Sunshine home gets down to $1300 a square meter over approx 210 SQM. So if you prefer your consultants to actual prices So Be It but I am only interested in the price that is on the actual contract. And real estate do not like it when I tell them a used home is over priced. And they say you could not build it for the price. And I show them advertisements for land at full asking price and builders prices in the papers for standard homes and they are usually $50000.00 cheaper than the run down dumps they are trying to flog off.

[minimoke]

SC – The higher deposit rates will only have a major impact on first home buyers at the bottom end of the market. First home buyer will always struggle to buy that brand new home or villa in Fendalton – they are for the third or more home buyers – those that have been in the market for a while. This is good news for investors as there may be more opportunity to increase your portfolio without having to compete with the first timers.

Possum. A couple of things about your post. Firstly the construction costs I have quoted are to build a single home off a predetermined set of plans. Its not an average – just the cost to build. If you took the same plans to a quantity surveyor or Carters they would come up with roughly the same cost. The construction costs are not a reflection of the build cost for building companies who build 10 – or 20 homes at a time and get the discounts connected with bulk buying.

You will also see the building companies advertise their off-the-plans- homes at say $1300 a sqm. But the moment you fiddle with the plan in the slightest expect the non-advertised price to begin heading for the sky.

And here’s some bad news. Housing building companies build 10 – 20 homes at a time. In the recent past they have managed to get extended credit lines from their suppliers (like Carter or Placemakers / ITM) these suppliers are tightening up their credit so unless the builder has a large amount of cash they may only end up being able to build two or three homes on credit – and not get such a discount on materials. What will happen – building company houses will go up in price. Alternatively the company will go bust (like another one in Christchurch last week) and their finished homes will get flicked off for a song – but you don’t see the misery of those who have already paid their deposits up front (and there’s another lesson!)

The other thing building companies were very good at doing in the good times was getting quotes for 10 houses to build, not charging the client the full discount price ( the builder keeping a bit aside) so the builder could end up building 11 houses with 10 new home owners paying for it. We are probably seeing this practice starting to be wound back with the builders passing on the full discount to secure the business so on the face of it the house will appear cheaper. This is purely cyclical and the discount homes will fall out of the cycle relatively quickly with new homes coming on stream at the new higher prices.

[Serpie]

SC – The higher deposit rates will only have a major impact on first home buyers at the bottom end of the market.

I'm hoping that will not necessarily be the case MM, as I have a few properties on the market at the moment that are suitable for first home buyers.

The government is (or should that be "was"?) keen to assist first home buyers into homes at the lower end of the market, and their "welcome home loan" exists to assist those entering the bottom end of the market.

Have a look at http://www.welcomehomeloan.co.nz/ . It's still pretty easy to get a big chunk of change if you have a decent income.

ANZ and National have officially declared their 20% standard, and my discussions with the BNZ lead me to believe that they have unofficially done the same, but perhaps this will just increase Kiwibank's and other participant's market share in this sector?

Perhaps those that will be hardest hit will be those who are trying to take advantage of the falling market by leveraging themselves up to the hilt to grab cheap rental properties?

[Serpie]

I'll sell you a house Shrewdy. Mates rates. Here you go:

http://www.harcourts.co.nz/listing/d...uata&id=449039

I'll even throw in some MRX and GBM shares for nothing!

[minimoke]

I'm hoping that will not necessarily be the case MM, as I have a few properties on the market at the moment that are suitable for first home buyers.

Yes – the govt has a few options to help people into homes – and KiwiSaver is coming up as well. I’m a bit uncomfortable with the scheme in that the Welcome Home, for example is for people who may not meet standard lending practices – and this sounds a bit like a Sub-Prime to me. But they will get charged a 1% premium for the pleasure – so this puts their repayment commitments up. Philosophically, I also think people should be able to come up with a decent deposit – it shows a saving behaviour which can be translated to a loan repayment behaviour. If you can’t save, then you may not be able to repay a loan. All well and good except a Welcome Home provider is Kiwibank – so once again the tax payer is expected to underwrite the high risk behaviours of others.