The Best Building Product Prices for Kiwi Builders, Developers  & New Home Builders

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“The Gap” for Building New Homes in New Zealand

With the chronic shortage of housing in New Zealand, it was just recently cited as much as 130,000 homes and growing, you would imagine all the components of making a new build happen would be well honed and fitting together to provide a seamless pathway.

Tens of thousands of people registered with Kiwibuild wanting to build their first home, tens of thousands of builders are out there who can build these homes, thousands of sections are coming available and interest rates are at an all time low. Capital gains tax is off the table while the PM holds the top job!

So where is “The Gap”?

For security against the loan, banks only want to lend on a completed house with its Certificate of Code of Compliance.

So how do we start the process?

Buy land and fund the cost of building?

Most New Zealand builders are small business with 1 – 5 staff and they don’t have the financial capacity to fund the build either. So, the banks won’t lend, and the prospective owners can’t fund and nor can the builders, boy is that a gap!!!

What we need is some progressive financial organisations to step into “The Gap”.

  1. A pre-approved mortgage for the new prospective homeowner will start the process
  2. Find a section location and price that works within the budget
  3. Find a builder, its not too hard there around 30,000 in NZ currently
  4. Work with the builder to develop an idea of what best works on the property
  5. They will generally work closely with some designers who can bring the plans together
  6. Consenting applied for
  7. Construction will generally that 6 – 24 weeks depending on site and weather

Group Housing is the common term for the BIG NAMES in house building and they offer an end to end package that covers step 2 -7. Easy answer you say and if you believe their advertising, they make it easy every step of the way and there is no doubting that across the board they produce a really good product. Many will have low deposits 10 % or less so what are the downsides to this option.

  1. They don’t do it for free, they do it to make money and that is good that they are profitable as hopefully that means they aren’t cutting corners on the finished product.
  2. They secure land in new subdivisions leaving little or no land for the general public to buy. Basic economics says where supply is low (or controlled) and demand is high, so too is price.
  3. The only value comparison is against another big brand company.
  4. Some companies BAN the new owners from coming on site while the home is under construction – Health & Safety aside, what do they have to hide or what don’t they want them to see?
  5. A small number of companies controlling available sections and setting prices for a build isn’t a true free market at work.
  6. Most if not all demand a rebate from their building merchant
    1. A rebate means that additional to the profit they make from you purchasing their finished home, they are insisting their supply merchant pay them a percentage of the cost of materials they have purchased to build with as a payment.

The Secret Commissions Act 1910 makes this rebate system illegal

      1. consideration means valuable consideration of any kind; and particularly includes discounts, commissions, rebates, bonuses, deductions, percentages, employment, payment of money (whether by way of loan, gift, or otherwise howsoever), and forbearance to demand any money or valuable thing.

http://www.legislation.govt.nz/act/public/1910/0040/latest/whole.html

  1. Some of them get taken off overseas sometimes with partners to major sporting events or luxurious holiday resorts.
  2. Lots of freebie tools, product and recreational gear gets dished out every year.
  3. Free and highly discounted material goes into a show home that they get to sell at a huge profit.
  4. Merchants don’t do these things out of the kindness of their hearts and nor do product suppliers who are asked to contribute to funding…..it’s all added onto the cost of products and services that the new home owner will end up paying for.

And why should the new home buyer worry about these matters, after all the Group Housing companies make it easy for them to purchase their newly built home. With the normal term of a mortgage now 30 years, then every $10,000 added onto the cost of the new home will cost circa $30,000 to pay back.

To effectively open the new build market up and allow those who want to build, the financial mechanism to do so will;

  1. Allow more builders and new homeowners to work together
  2. Reduces the pinch point that exists in the current marketplace
  3. Help drive down costs
  4. Lowers the barrier to more people getting into their own new built homes
  5. Brings broader competition to the new build market

Building Products Online is working to offer the best priced building products for builders, lower the cost of housing for Kiwi families, and help bridge the gap between the financing of house builds till completion without having to rely on the big guys out there.

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