Costs Are Rising
If you’re trying to decide whether to build now or in the future, it’s important to be aware that the cost of building a house is rising more steeply than either inflation or wage growth. The HIA has reported that the price of skilled trades has increased by over 5% in past year, while the price of materials has increased by 8%. What has caused this? During 2020 and 2021, Government grants provided stimulus to the construction industry which caused an increase in demand for both goods and labour. Increase in demands ultimately leads to increase in prices. Additionally, the COVID-19 pandemic has caused labour shortages, and global supply chain issues (also as a result of the pandemic and the war in Ukraine) have meant that supplies are costing more to deliver and are frequently delayed. Construction materials such as steel and structural timber have been particularly impacted, driving a large proportion of the price rises.
The vital question now, is will these costs keep rising into 2023? With many forecasters and economists predicting more price rises, and many building companies announcing that they’re currently losing significant amounts of money on fixed-price contracts, the answer is a very likely yes. If you plan to build a new house and you find yourself in a stable financial situation, it might be a wise idea to sign the contract and begin now rather than risk further price rises.
Interest Rates are on the Move
The Reserve Bank has already begun an expected onslaught of interest rate increases in response to spiralling inflation. While fixed rates have already risen sharply, the steep increases in the cash rate will flow through to variable mortgage rates, significantly lifting minimum repayments and reducing borrowing power well into 2023.
Now is a good time to secure finance for your new build! You can lock in a rate now, purchase your land and secure a construction loan, and refinance in the future if/when rates go lower.
Government Grants available
While the Federal HomeBuilder initiative may have ended, there’s still assistance out there – particularly at state level for first homebuyers. WA’s building bonus grant is one such form of assistance, those eligible will receive $20,000 to help with the build of their new home. This grant is set to expire in April 2024, so beginning your build now will ensure you receive the grant (if you meet the eligibility criteria).
For more advice or help with government grant applications, WOW Homes can guide you through the process and ensure you receive all of the grants that you are entitled to.
Have You Decided to Start Building Now?
If you don’t want to run the risk of any more price rises and want to settle into your brand-new dream home sooner rather later, get in touch with the team at WOW Homes today. A deposit of $1,500 is all it takes to get started. With a wide range of award-winning home designs that focus on functionality and a team of friendly and supportive staff on hand to help you at any time, building a new home has never been easier.
Check out our affordable house and land packages across Perth and let us deliver a home that has real WOW factor for your family today. Call (08) 9318 6000 or enquire online now.