The $10,000 Queensland Building Boost started last weekend and no doubt will lead to more housing starts, pulling forward those first home buyers lucky enough to have a bit of a deposit; and investors who can look beyond the current economic malaise.
The boost (and any additional developer incentives) is effectively doing what the more astute developers have been doing for some time – meeting the market. Many need to sell their existing home before they can buy a new dwelling, and most expect the developer to share their pain. That is, if they need to drop their asking price by say 10% in order to sell, then they expect the developer to do likewise or at least meet them part of the way.
Price, however, is only ever part of the equation. Buying a new dwelling has numerous benefits over buying a second-hand property. This particularly applies to investors. Few new residential developments, for mine, promote these benefits well enough. Some don’t even bother to discuss them at all. One firm that does is Ausbuild.
New homes offer buyers:
- Great capital depreciation – with up to 60% of the built cost being tax deductible over time,
- A builder’s warranty – and often these days for materials too,
- Energy-efficient and more importantly, government-compliant “green” inclusions,
- The need for far less maintenance, and
- According to our research, about 15% more real value than a similar second-hand property.
That 15% is often forgotten about by buyers and valuers too. Think about the true cost of a new kitchen, bathrooms or a laundry. Don’t forget about the cost of new floor coverings; painting; air-conditioning; purpose-built storage; security screens and fencing. We have itemised these things across several new dwellings and have found that they can add up to well over $70,000, or about 15% more than the median sales price of a second-hand dwelling (in SEQ) that don’t have all these goodies.
Many of the things that a renter really wants can often only be found in a new home. Again, revisit the Ausbuild Beyond Living E-Magazine (page 12). Also, a recent QBE LMI survey found that 14% of first home buyers rent out a room after buying to help meet their mortgage payments. New homes make such rental arrangements easier.
There are many ways to sell property – price is important, but it isn’t the only ingredient.
“This report is republished with permission of Matusik Property Insights.”