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Is it Cheaper to Build a New Home or Buy One?

Cropped photo of a draftswoman and her colleague working at an architectural drawing at the table

With house prices seemingly always on the rise, it’s never been more important to ask the question, “Is it cheaper to build a new home in New Zealand or buy one?” In the past, people chose to build their new homes because they wanted something customised to their lifestyle. Of course, everything being brand new is also a pretty good incentive.

However, the choice to build a home is now being influenced more by the housing shortage which has seen generous incentives offered to build your new home. Or of course, to buy a new build as part of a house and land package.

However, despite all of these incentives, which is actually cheaper?

The average national house price

Firstly, let’s consider the average price for buying a home. These figures are from the Real Estate Institute from late 2021.

  •       Auckland – $1.2 million
  •       Wellington – $875,000
  •       Bay of Plenty – $840,000
  •       Tasman – $800,000
  •       Waikato – $780,000

The national average overall was $850,000. Pretty big dollars, especially when we think back to where house prices were just 10 years ago.

New build costs

Figures from Stats NZ show that the national average cost to build a new home is $2325 per square metre for the year ending June 2021. If we also take a look at the average new home size for the same period, it comes in at 155sqm. On that basis, the national average new home build cost is around $360,000.

However, this is purely the building cost. You need to consider other aspects such as design, consents and other fees. Plus, of course, the most expensive part being the land itself.

The full costs explained

Naturally, finding and purchasing land is an expensive exercise, so this needs to be taken into consideration. Then, if you’re building a new home, you need to consider the other costs associated with that land. For example, a sloping block will be more expensive to build on than a flat one.

With that said, we can look at some of the figures from CoreLogic to get an idea of the total costs. To build a new home in Auckland, for example, the average cost was $997,448 compared to $1.2 million to buy an existing one.

Wellington was similar, with a new build costing on average $765,853 compared to almost $1.1 million. In other parts of the country, the costs are closer together. So, while the costs of materials, land and building have increased in recent times, the increases haven’t been as significant as those for buying existing properties.

The variables

The figures quoted above are averages, and naturally, every home is different. The type of land you build on is a big consideration, with flat blocks being preferred. Building on sloped land is going to cost you a lot more in site prep costs.

In addition, the type of home you want to build is going to affect the costs considerably. You may think this is due to the size and complexity of the home, which is part of it, but there are also other factors at play.

If you want to build an upmarket home with lots of architectural design elements, your costs will increase for house designers, architects and other building services. You can save a lot of money by approaching a building company that has new home designs you can buy straight off the plans.

Why choose a new home build?

So, depending on where you live in New Zealand, the cost of a new home vs an existing one is pretty variable. However, even in a place like Christchurch where the costs are almost the same, why buy an old house when you can get a brand-new one for the same price?

Part of the appeal of building a new home is the chance to have something brand-new that’s completely yours. Even with ‘off-the-plan’ home designs, you can still make certain adjustments to ensure the home suits your lifestyle.

Let’s not also forget the cost of living pressures everybody is under. New homes are made to strict, modern building codes which means they are well-insulated. You can have energy-efficient heating, hot water systems installed, even solar panels and other green innovations. In the long term, these types of features are certain to reduce your ongoing costs of living.

Looking for the best new homes in New Zealand?

Stonewood Homes has a huge range of beautiful home designs to choose from, making it more cost-effective for you to build your own home. We also offer custom home builds, so if there is something you want, we can make it happen. Rather than buying a new home and dealing with all of the potential problems it can bring, have a chat with our experts about a new home build today. Contact Stonewood Homes for more information. 

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