To Build Or Not To Build
As independent building consultants (New Home Building Brokers) we come across many first home buyers asking when is a good time to build, should they build due to the current First Home Owner Grant and stamp duty exemptions or where is a good location for growth. However in the current market and political scene (both state & federal) there are a number of key points to consider
1. First home buyers are increasingly being pushed to the extremes of Perth in the name of housing affordability. If you haven’t driven to Yanchep, Alkimos or Byford recently, you should be prepared for a shock. Aside from a significant commute to work there is a distict lack of infrastructure.
2. Finance – obtaining a finance pre approval from a lender or broker presents as relatively easy, however obtaining a formal finance approval is presenting as an issue in the building industry due to low valuations & increased regulatory requirements from lenders. The current over supply of established stock in Perth also plays a role. These issues are only going to be compounded by the current Royal Commission which is scheduled to run through to at least the end of this year.
3. WA State Budget – There is good awareness that the residential construction industry is a large multiplier for the economy in comparison to the purchase of an established home. Successive state governments have trimmed the stimulus available for first home buyers and this direction is unlikely to be changed soon based off forecasts for the upcoming WA state budget (we won’t even talk about GST for WA).
4. A key driver for housing price growth is access to services and infrastructure, whilst developers and sales consultants in display villages are keen to talk up future plans for land estates at the extremes, first home buyers need to consider their requirements and the potential for limited growth.
5. The WA State government is pushing local governments with regards to town planning schemes advocating for the increase in dwelling density in proximity to existing infrastructure eg: rail and road networks. The City of Nedlands and Subiaco are just 2 examples of councils having proposed significant changes with regards to urban infill and the growth of apartment living in Perth
NHBB encourage first homebuyers to do their research and to debate the pro’s v con’s of buying land and building at the extremes of the Perth metro area. Whilst the first homeowners grant and stamp duty exemption may sound appealing it may take several years before any capital growth is actually achieved.
About the Author
Brad Kingston | Executive Consultant
Brad has extensive experience in the construction industry having worked in both the custom project builder and development industry sectors. Having just completed his own large scale renovation project has given him a hands on appreciation of the building process from a client perspective. Brad understands the constantly evolving nature of the building industry and enjoys the independence that NHBB provides. He looks forward to helping clients understand the building process and to provide more transparency for all parties involved.