They do say that necessity is the mother of all invention. And so, as first home buyers feel like they’re running out of options, some are getting inventive with their solutions.
While building a home may scare many, it’s a solution to several problems.
For one thing, there’s a very real financial incentive.
If you qualify for the KiwiSaver HomeStart grant, you get double the cash for building instead of buying an existing house, up to $10,000. If you’re in a couple, that could be $20,000 to add to your deposit.
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But even though those are no small potatoes, the biggest bonus is still in the building itself.
When a deposit is hard to scrape together, the standard New Zealand three bedroom home could well be outside of your reach.
Listen to the Cooking the Books podcast on this topic below:
Meanwhile a smaller home, on a smaller parcel of land, is much more affordable.
Build it smart and you will have all the storage you need, without wasting money on extra bedrooms that you never use.
No point paying for something you’re not using.
This is usually where people start worrying about “resale value” – because surely, a smaller home would have fewer potential buyers when you want to move on to a family home?
Well, the data says you have nothing to worry about on that front.
OneRoof statistics for the last couple of years have shown property markets flattening out – except in the “affordable” end of the market. Read, smaller and cheaper houses.
That end of the market tends to stay healthy no matter what the rest of the property market is doing, as first home buyers and investors keep hunting for bargains.
First home buyers in particular tend to buy when they’re in the right stage of life, rather than being influenced by other market trends.
But for those who can’t stomach the thought of building small, there’s another option at the other end of the scale.
Anecdotally, building companies say multi-generational homes are increasingly being requested.
This means building bigger, but with perhaps two separate properties on the same piece of land, or separation between two homes within the same house.
It’s a clever trick for those who get along with their family. It means a bigger deposit, with more of you to pool resources.
It could also mean other life benefits, like sharing child care, life maintenance like cooking or gardening, or just seeing each other more often.
Up to you if that’s a benefit or not.
Building lets you think outside of the box, to get creative with what could work for you, and help you get that first difficult foot on the property ladder.
You’ll need to do homework to make sure you go into the project with eyes wide open, and a realistic chance of success.
But it’s a small price for ending up with a smaller price.
Listen to other episodes in the series:
Episode 1: Buy v rent
Episode 2: Saving for a deposit
Episode 3: Negotiating a mortgage
Episode 4: The power of location
Episode 5: Tricks for paying off the mortgage faster
Episode 6: How to crush the debt
Episode 7: Apartment v house
Episode 8: Renovate or detonate?
Episode 9: How to solve land headaches
Episode 10: Is now the time to get nervous about your KiwiSaver?
Episode 11: How to house hack your way to smaller household bills
Episode 12: The tough talk you need to have when saving for a house
Episode 13: Is NZ ready for first-home buyer landlords?
Episode 14: Could the rule of 100 turn around your fortunes?
- Frances Cook is the host of the personal finance podcast Cooking the Books. She is not a financial adviser, and all information is general in nature. For individual advice, see a financial adviser. Listen to her podcast on OneRoof.co.nz
