Real estate, post COVID-19 level 4 (since 2020)

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#2780841 20-Sep-2021 01:22

Obraik:

I'm starting to get nervous.

3 Months ago we started looking at some land in Canterbury. Before we put an offer down, we checked out the prices of some housing plans that we liked the look of to make sure that we weren't going to buy something we couldn't afford to build on. Everything looked good - we'd be well under the maximum amount we wanted to borrow, likely with enough left over to build a large workshop building on the land too. In the time it took for the deadline sale to complete and for us to go unconditional on the land, the original plan we were looking at is now being priced at $140k more than it was 2-3 months ago. The title for the land isn't due until Feb and I don't imagine the price rises are done with yet 😬

Here in the homeless and MIQ dump capital of NZ, Ghettorua. Land & House packages don't go below $800K for 500sqm 3B 2T 2G.

Geektastic

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#2780859 20-Sep-2021 08:24

Obraik:
I'm starting to get nervous.

3 Months ago we started looking at some land in Canterbury. Before we put an offer down, we checked out the prices of some housing plans that we liked the look of to make sure that we weren't going to buy something we couldn't afford to build on. Everything looked good - we'd be well under the maximum amount we wanted to borrow, likely with enough left over to build a large workshop building on the land too. In the time it took for the deadline sale to complete and for us to go unconditional on the land, the original plan we were looking at is now being priced at $140k more than it was 2-3 months ago. The title for the land isn't due until Feb and I don't imagine the price rises are done with yet 😬

At least your asset had increased in value whilst you wait. If the worst comes to the worst you can sell it for more than you bought for.

Alternatively, build a barn with a living area which becomes your workshop and garage with guest accommodation when you build the main house in a few years?

Geektastic

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#2780861 20-Sep-2021 08:29

Handle9: My experience is in a major international corporate so I can't speak to small business rates but our cost of borrowing is significantly lower than mortgage rates.

It's not a small business scenario.

Also, the treasury department of a large international business will be adept at putting in place arrangements where the money is sourced from wherever it's cheapest in the market worldwide. A domestic mortgage isn't commonly able to be arranged like that.

Obraik

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#2780901 20-Sep-2021 09:50

Geektastic:

At least your asset had increased in value whilst you wait. If the worst comes to the worst you can sell it for more than you bought for.

Alternatively, build a barn with a living area which becomes your workshop and garage with guest accommodation when you build the main house in a few years?

There is that. I think the next stage that's about to open which has similar sized sections will likely be close to another $100k more than we're paying.

Not sure about the barn idea...the covenants might make that a no-go 😞 We're not completely out of options yet, but it's getting close. However, I think we're only weeks/months away from new builds just being completely unobtainable to new home buyers though.

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Geektastic

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#2780939 20-Sep-2021 11:51

Obraik:

Geektastic:

At least your asset had increased in value whilst you wait. If the worst comes to the worst you can sell it for more than you bought for.

Alternatively, build a barn with a living area which becomes your workshop and garage with guest accommodation when you build the main house in a few years?

There is that. I think the next stage that's about to open which has similar sized sections will likely be close to another $100k more than we're paying.

Not sure about the barn idea...the covenants might make that a no-go 😞 We're not completely out of options yet, but it's getting close. However, I think we're only weeks/months away from new builds just being completely unobtainable to new home buyers though.

But at least you made $100k+ whilst you waited, if nothing else!

Check the covenants carefully: maybe a 'shed' or a 'garage' is not prohibited but a 'barn' is etc. or perhaps there is a time limit on completion? We live on a former sheep farm that was divided up into lifestyle blocks and there is no limit here on when you start, but there is on when you must finish once you do. Several of the sites are still sheep paddocks and likely to remain that way for some years according to the owners who bought them for retirement houses.

Obraik

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#2781072 20-Sep-2021 12:51

Well..sorta? I don't technically own the land yet. I won't own it until the title comes in and the bank gives me the loan for it. My current loan conditions require a bank approved build contract for the loan.

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quickymart

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#2781175 20-Sep-2021 15:04

House prices don't really seem to have shot up as much this time around, compared to last year's level 4 lockdown.

heavenlywild

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#2781177 20-Sep-2021 15:07

quickymart:

House prices don't really seem to have shot up as much this time around, compared to last year's level 4 lockdown.

Don't speak too soon. Wait until Auckland is out of level 4 and 3. Even if prices only increase by 1% a month, that still equates to 12% annual growth, compounding.

GV27

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#2781291 20-Sep-2021 20:08

heavenlywild:

Don't speak too soon. Wait until Auckland is out of level 4 and 3. Even if prices only increase by 1% a month, that still equates to 12% annual growth, compounding.

It's also 1% of an absolutely enormous number to begin with.

Geektastic

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#2781331 20-Sep-2021 21:27

quickymart:
House prices don't really seem to have shot up as much this time around, compared to last year's level 4 lockdown.

I don't think we've had adequate time elapsed to see what effect it has or doesn't have.

mattwnz

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#2781378 21-Sep-2021 01:01

quickymart:

House prices don't really seem to have shot up as much this time around, compared to last year's level 4 lockdown.

Very few houses have come on the market since lockdown. Quite a lot have sold, but some aren't selling, some are asking some really crazy amounts. Some are just houses you wouldn't want to touch.

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mattwnz

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#2781380 21-Sep-2021 01:04

Divhon88:

Obraik:

I'm starting to get nervous.

3 Months ago we started looking at some land in Canterbury. Before we put an offer down, we checked out the prices of some housing plans that we liked the look of to make sure that we weren't going to buy something we couldn't afford to build on. Everything looked good - we'd be well under the maximum amount we wanted to borrow, likely with enough left over to build a large workshop building on the land too. In the time it took for the deadline sale to complete and for us to go unconditional on the land, the original plan we were looking at is now being priced at $140k more than it was 2-3 months ago. The title for the land isn't due until Feb and I don't imagine the price rises are done with yet 😬

Here in the homeless and MIQ dump capital of NZ, Ghettorua. Land & House packages don't go below $800K for 500sqm 3B 2T 2G.

That seems pretty average these days. Would have been 600k a year or so ago. That is house inflation for you, and new builds are supposed to go up even more with material shortages. Just been told material prices on kitchen stuff is going up 6.8% in October, and that is after big rises earlier this year. I probably wouldn't want to be building a house over the next few years. Recently build houses at the moment seem to be selling for really high amounts, maybe due to people not wanting to run the risk of building and getting hit with escalating material prices. Saw a 1-2 year old one advertised for offers over 950k, which I thought was crazy high. Sold a week later for 1 million, and that was sold during level 4, and it had only gone on the market a week prior to level 4..

quickymart

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#2781410 21-Sep-2021 07:24

mattwnz:

quickymart:

House prices don't really seem to have shot up as much this time around, compared to last year's level 4 lockdown.

Very few houses have come on the market since lockdown. Quite a lot have sold, but some aren't selling, some are asking some really crazy amounts. Some are just houses you wouldn't want to touch.

Even if they come into the latter category, you can always knock said house down and either relocate one there, or build a new one - although I do see your comment about the price of building materials rising at the moment.

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#2781413 21-Sep-2021 07:36

quickymart:

House prices don't really seem to have shot up as much this time around, compared to last year's level 4 lockdown.

last year's level 4 it dipped slightly due to the doom predictions of every economist,

the shooting up happened when they came out of lockdown iirc

tdgeek

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#2781414 21-Sep-2021 07:38

https://www.stuff.co.nz/the-press/news/126440092/bowls-club-on-a-roll-after-old-site-sells-for-115m

“Christchurch is still very undervalued, especially with all the anchor projects now under way. It’s going to be one of New Zealand’s most liveable cities.”

There are are lot of subdivisions here, so we seem to be building at a pace that keeps supply and demand in check. Too expensive, easy enough to look elsewhere, so no pressure to pump up prices.

Auckland and Wellington are presumably quite capable of the builds that we are doing, but their issue is expansion. Wellington doesn't have endless flat land, there is little that can fix that. And with Auckland being a much larger city, no one wants to live too far out, well you cannot fix that either, so the excess demand will probably always exist in some form

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