Building a New Home or Buying an Existing One: Which is Cheaper?

ouple In Front of New Home with New House KeysThere seems to be a mixed impression over the comparing the costs of building a new house in New Zealand than buying an existing property.

Home builders in the country believe that new housing projects cost more in December 2017, up almost 7 per cent year over year based on CoreLogic data. On the other hand, ANZ economists said that buying an existing house would be more expensive.

Land Development

Planning consultants usually advise home builders how much it would cost them to acquire land for potential development, which is arguably the biggest factor for high construction prices. Despite this trend, many Kiwis still decided to build new homes in September 2017, when building consents reached the highest figure since 2001, according to CoreLogic data.

Those who want to build homes from scratch should take note of land prices in different cities. In Auckland, the median section price amounts to more than $582,000, while it costs almost $266,800 in Wellington. Prices in Christchurch and Tauranga cost nearly $228,400 and more than $324,000, respectively.

It’s Cheaper To Build

Existing home prices in New Zealand have risen 50 per cent since January 2012, while prices for new home construction rose 30 per cent during the same time. Hence, some ANZ economists said that it might be more cost-efficient to build a new home.

Affordable housing serves as another reason for pursuing new home construction instead. Since construction prices have also increased, it will remain difficult for Kiwis to look for lower-priced homes on the market. For instance, it is unlikely that builders in Auckland will launch new homes worth less than the median price of $900,000.

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The price difference between building a new house and buying an existing one depends on where you plan to buy or build a home. Home builders and even individuals should seek professional advice to find out which would be better for them.