Taranaki’s booming property market is driving demand for new homes, but as many buyers look to build section prices are soaring too.
Signature Homes Taranaki managing director Geoff Mockett said he had seen a noticeable boost in demand for house and land packages in the reigon.
This was due to the booming prices of existing homes narrowing the gap with the cost of a new build.
In November, record median houses prices were set in the region’s three districts, with New Plymouth’s now at $585,00, South Taranaki’s at $353,500, and Stratford’s $392,000, Real Estate Institute of NZ (REINZ) figures show.
By comparison, Signature Homes has house and land packages ranging from as little as $559,930 for a three bedroom, 2.5 bathroom home in Inglewood with several others in New Plymouth in the $600,000 to $750,000 range.
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“People are buying them, as soon as they hit the website, some of them. The prices are getting close sometimes and it’s better to build new, you get a better quality product,” Mockett said.
Some people were also opting to move outside of New Plymouth, accepting a longer commute, to get into a home, he said.
A subdivision created by the Stratford District Council sold much faster than it predicted, with 25 of the 33 sections sold or under contract in less than a year.
Some of those new home packages were less than the $500,000 cap, meaning the buyers were eligible for the government’s first home grant of up to $10,000 per person, Mockett said.
“It’s been fabulous for them to have their first home and for it to be a new one, they’re building their asset base and in a warm, dry home,” he said.
As well as getting a new home with modern comforts, like full insulation and aluminium joinery, buying a house and land package meant you were not drawn into a bidding war with other buyers, REINZ Taranaki representative Garry Malcolm said.
Another option is to purchase land and then employ a builder, something New Plymouth artist and musician Jordan Barnes and his partner have recently done.
The couple started out looking for a house after the Covid-19 lockdown, but found competing with dozens of other potential buyers at open homes and seeing houses selling for $50,000 to $100,000 over the asking price was overwhelming.
The pair have just bought a 800 square-metre section in Frankleigh Park and hope to be in a new house, which Jordan’s builder father Neil Barnes will build, by winter.
“We are very fortunate, having a family of builders was a great card to play,” Barnes said.
Their new house will be two-bedrooms, to keep costs down.
“It’s just a little starter house, nothing too big. We don’t want to go beyond our means, we are building what we need.”
A kit set starter home from a franchise firm like A1 Homes can be built for as little as $246,000 but the burgeoning cost of sections means building new is likely out of reach for most first home buyers, and even some wanting to trade up.
This is especially true in New Plymouth. The cheapest of the five sections currently listed by Harcourts is in Inglewood, with an asking price of over $200,000, while in the city prices range upward from $349,000 for a subdivided section on Tukapa St.
Award-winning builder Mal Barnes, who is Jordan’s older brother, said the increasing land price was changing the cost of building.
It used to be about one third for the land and two thirds for the house but things had “almost gone the other way because the land price is so high”, he said.
But that didn’t mean there was a shortage of people willing to pay and build new, Barnes said.
“There’s a shortage of land. I don’t think they can develop it fast enough at the moment, it has gone through the roof since Covid.”