It is a well known fact that building a home during a construction boom time costs you more than if you were to build during a recession.
The reason is fairly simple …. supply and demand!
When interest rates are at the lowest levels ever then of course this stimulates the economy. People like to use cheap money to invest in property or update their existing home.
Building approvals also at an all-time high this means the construction workforce is in over-load.
Because the construction industry was in such decline for so many years many tradies re-trained into different areas and there were no apprentices coming through the ranks. Tafe’s were even closing down courses.
Now just as predicted we have a construction boom. Unfortunately there are not many tradies left to do the work so therefore you wait to build your new home or you pay higher prices to jump the queue.
Even though there is great competition amongst builders to win your contract the profit margins will start to creep up. The cost of the individual tradies will also creep up. Before you realise it the saving on the interest rate payments is overshadowed by the additional building in the first place. It is a vicious cycle.
Buy land….now! Build later when things settle down. Pay off your land as quickly as possible while interest is cheap. You will even see an appreciation in land costs over time.
This will also give you time to plan your new home properly. You can also save oney as possible to reduce the initial borrowing amount which will save you interest.
If you wait until the boom finishes you will also be able to get skilled tradies when you want them at a reasonable price.
No one is in a rush to go broke but sometimes you don’t realise when you are in a rush.