Venture Developments director Mark Fraser-Jones says more people have started to view showhomes. Photo / Supplied
Five per cent deposits and fixed-price contracts are just some of the incentives building companies have put on the table to entice buyers amid a nationwide slowdown.
Company owners say the supply chain woes, material price increases and delays that have plagued the industry are easing but the biggest challenge now is the banking sector's lending criteria.
One says some banks' income are stress-testing at eight per cent on top of a build cost of 15 per cent. Another thinks more builders will start building spec homes.
New Zealand's largest bank, ANZ, said its Blueprint to Build offer was a 2.76 per cent discount off its standard floating rate for two years and that had generated $3.5 billion in lending since it launched in July last year.
Classic Group director Peter Cooney said building a house in a softer market rather than one that was spiralling upwards was a good option.
''Building a new home does have its advantages, and while we have seen material and labour costs increase in recent times the cost of building materials won't fall back to where they were.''
Cooney said the key challenge for buyers was securing finance, with many banks giving a 90-day approval.
''If this lapses, the buyer needs to reapply and may or may not receive approval again depending on the criteria or if their position has changed. You will see more builders start building a home before it is purchased [spec building] to support buyers who can only secure finance if a home is completed and settled within the 90 days.''
Classic Group did not have any blanket-wide incentives running as it depended on the subdivision in question.
However, depending on the circumstances, fixed pricing on contracts and five per cent deposits could be available.
Because the Bay of Plenty was one of the most desirable places to live in New Zealand it had to work ''pretty hard'' to bring a variety of price-pointed new homes to the market, he said.
It had two-bedroom homes in Ōmokoroa from $655,000 and a three-bedroom, two-storeyed terraced home for $735,000. Standalone homes in Pāpāmoa cost from $870,000 and Ōmokoroa from $825,000, which were under Tauranga's first-home buyers grant cap of $875,000.
Barrett Homes Bay of Plenty branch manager Lianne Simpkin said it would launch 41 Pāpāmoa townhouses shortly.
''They will be built within a commercial sector, providing the end user with backyard access to restaurants, cafes and an on-trend coastal lifestyle. We expect a large uptake from investors and young couples seeking an easy-care lifestyle.''
It was also offering lower deposits starting at five per cent and turn-keys on application.
Making big life choices [like building a home] in these changeable times was difficult, she said.
''If you build a new home now you could enjoy good capital gains, with homes still in short supply. Committing to your project now gives you the security of fixing the price of your build project. History shows that the best time to build is now, with assets in residential property well placed to protect and grow your wealth.''
Finance was the principal challenge it was facing in the industry.
''The process involved with securing a loan has become more challenging. The best advice we can give is to talk with a broker who will help you navigate the finance maze.''
It had land and house packages at Ōmokoroa starting at $795,900, and $889,000 in Pāpāmoa.
Classic Builders Lakes District owner Paul Taylor said all of its upcoming house and land package releases have an option of a zero per cent deposit on progress payments.
''This means you don't have to pay anything until the titles arrive and you settle on the land. From a lending perspective, banks find this positive as there is security in the land before the build progresses.''
In the current economic climate banks had introduced tighter restrictions on lending, making it more difficult for clients to gain finance.
Classic Builders offered fixed-price contracts so the buyer can be reassured that the price which was set initially won't escalate, Taylor said.
Its current house and land packages in Rotorua ranged from $600,000 to $950,000 and would be released in the coming months.
''Building a new home is often a more cost-effective option in the current housing market. It gives you the opportunity to design a home which is purpose-built for your lifestyle.
''We have seen lots of people relocating to the regions from the bigger centres as well as many New Zealanders returning home or new Kiwis gaining residency.''
Enquiries were steady, and with the new medium-density rules coming into effect, people are able to gain much more from their existing land, he said.
Venture Developments director Mark Fraser-Jones said there was never really a 'bad' time to buy as it depended on a number of factors and the current state of the market was just one of them.
''Remember, you will probably own your home for quite a long time so the likelihood of your interest rate adjusting up and down is inevitable. The sooner you get on the ladder the better in the long-term.''
Demand had been fairly slow since the end of last year but it had recently seen more people coming through the show homes, which was normally a pretty good indicator that people were ready to buy again.
Venture Development had homes in Pāpāmoa for under $875,000, which meant buyers may qualify for up to $10,000 for the First Home Grant and the First Home Loan which reduced the deposit requirement to five per cent.
Signature Homes national marketing manager Kim Harris said it just completed a survey with 2700 respondents, and out of that 352 people wanted to build but couldn't get lending.
She understood some banks were income stress-testing at eight per cent and then adding an extra 15 per cent on top of the build cost.
Harris said it was offering a fixed price home build price, with caveats to combat that.
''We are trying to lead the new-build conversation and give people confidence again. So what we have seen with the survey is people are nervous because they are being thrown new information saying don't build, it's too scary and too expensive.
''We are just trying to slow them down and give them the facts we are seeing.''
Another standout from the survey was that 719 people were worried about material cost increases but that was improving.
Master Builders Association chief executive David Kelly said inquiries had slowed down, which could spell good news for people who wanted to build.
''For the last three years you couldn't even get in the door to talk to a builder or designer because they were so busy. You'd have to wait months before they were even interested in starting that process.
''But now there are builders and designers available.''
Kelly said people could start the process and get their heads around everything without having to commit.
In his view, it was an opportunity for people to see what designs they wanted and could afford but on the reverse side the current marketplace could put others off.
''They tend to stop and wait. They are looking for a bargain and that is probably unrealistic as prices don't tend to come down. Then everyone comes back at the same time and floods the market again.''
Kelly said that in itself was a risk.
ANZ external communications manager Kristy Martin said new builds were exempt from the Reserve Bank LVR restrictions for owner-occupied properties and could be a great option for many customers with deposits that are lower than 20 per cent.
Since its launch in July 2021, it had helped more than 7000 customers build a new home - with $3.5 billion of lending drawn on our Blueprint to Build rate.
'' It's important to note that while building a new house is exciting, it does require a lot of planning. While not unusual in the building process, cost overruns can be stressful if people haven't allowed for them.
''We do consider potential cost overruns when we assess construction loans, and regularly review our policy around this to ensure it's appropriate given the current inflationary environment.''
A Kiwibank spokeswoman said there was a steady demand for construction lending.
From full approval, customers had six months to commence drawdown on a construction loan and it did not always require fixed-price contracts.
''Kiwibank allows for a cost escalation contingency amount as part of our affordability assessment. The contingency ensures customers will be able to meet the total construction costs in most circumstances where they encounter cost overruns during the construction period.''
The wishing tree appeal is in its 31st year and the need for it 'has never been greater'.