Time is Money – Many home buyers have no idea that the cost of building a new home historically increases year after year. What does that mean for you? It means that delaying the building of your new home will more than likely cost you thousands of extra dollars not to mention wasted time.
Do the sums
The Australian Bureau of Statistics (ABS) keeps tabs on the cost of construction in Australia. In fact, they have been keeping tabs on the numbers for many years.
What they have been able to determine is that over the last 20 years, the average cost to build a new home increases from anywhere between 4.5% to 5.4% each year.
This is mainly due to commodity prices such as timber, steel, concrete and the price of electricity, as well as many other factors.
If you take that $500,000 house that you have been dreaming of building and you put it on hold and wait just one year (this is assuming that the cost of building only goes up 5%), it is going to cost you an additional $22,500 – $27,000 to build that same home a year from now.
That is not even including the increased price in purchasing the land or the possible increase in bank interest rates. When you start adding up all of the numbers, the cost of your beautiful $500,000 dream home can go up astronomically over the next few years
Put simply, if you can’t save in excess of the $22,500 – $27,000 price increase per year then it’s actually costing you money.
Don’t fall into the trap of trying to wait out for better interest rates, more land opportunities becoming available, building prices going down or house prices going up.
Don’t look back a year or so from now and wish that you had made the decision to build your new home when rates were great and building prices were lower.