A good time to build?.

April 2023

Some customers have spoken to us about whether this is a good time to build given the relatively high interest rates at the moment. Here's our thoughts on the matter..

-There is never a bad time to build. Any new home is a long-term asset which will increase in value over time regardless of the starting position.

- Material prices have stabilised and in some cases have come down slightly in the past few months. We don’t believe there will be a significant drop in prices but it is a refreshing change to the past 18 months when increases were happening on a daily basis.

- Labour and other resources are more readily available now than they were 12 months ago. Once interest rates start to drop, there will likely be a spike in demand for new housing which could mean a possible return to a period of delays and uncertainty.

- Costs can still be reduced by effective design and sensible material selections. Also, there is a general acceptance that smaller, well-designed homes still produce a very enjoyable living environment.

- The general consensus is that the official cash rate has peaked and will remain stable for a period of time this year, possibly even dropping by the end of the year.

- Whilst the OCR has increased, most recently by 50 points, lending rates have not increased to the same extent, a sign that the banks are not looking to capitalise or over commit borrowers. We see this as an encouraging sign.

Obviously, everything comes down to individual circumstances and financial position but, given there is still a shortage of housing across New Zealand we believe there are still many very good reasons to keep building new homes.