Martin Hawes: If you're going to build - now would be good

Photo / NZ Herald

If I were ever to build a new house, now would be the time as it seems all the stars are aligned to make it worth my while.

Those stars are the three main components of the price of a house - the section, building materials and labour.

Some areas have many hectares for sale - in vast areas of unsold sections in some parts of the country the "for sale" signs seem like a forest. Deals can be done on sections - whether it is with the owner or the receiver of the company that developed them (or the mortgagee), you should be able to buy cheaply.

Building materials are also cheap. Commodity prices are low - their prices are rising but are still a long way from where they have been. Zinc, steel, copper, aluminium and most of the other things that go into houses cost nothing like they did a couple of years ago.

Neither does labour. Many consultants (architectural designers, engineers, etc), builders and sub-contractors are looking for work and clutching very sharp pencils at present. Joiners seem especially keen to find new deals.

Put it all together and you could get a brand new house for not much more than some people are asking for an old one.

This will not last forever because as a nation we are not building enough houses. We need around 26,000 new houses each year yet, to the year ended March, only 16,000 consents were issued.

This shortage of 10,000 houses a year will no doubt be managed for a while by compression - more people will occupy a house as children come home to live with their parents and families move in together.

However, that will not last. At some point we will have to start to build more houses. When that happens over the next couple of years, a new house is likely to become more expensive.

Who will build them? Well, I guess the Government will build a few and big players such as Fletcher Building will also get stuck in.

However, a lot of developers have either already gone broke or are in no position to fund housing on a grand scale. That leaves the likes of you and me. Individuals looking to build their own house to live in have the market wide open to themselves.

I built a new house in 1987 and have never got over the traumatic experience. But just because I found it traumatic doesn't mean it is not a good idea for you. If you want a new house and are prepared for the hassle that goes with building, now is the time to get on with it.

* Financial author Martin Hawes shares strategies to help you grow your wealth. Email questions to info@wealthcoaches.net