With the surge in house prices over the past couple of years, the home purchasing process has become more difficult and stressful for many buyers. Massive queues at open homes, having to compete in multi-offer purchasing scenarios, as well as spending money on due diligence for properties that you don’t end up buying are all common issues at the moment.
These situations, along with changes in traditional Kiwi housing culture and affordability, have resulted in a huge rise in the popularity of townhouses in recent years. Brand new townhouses purchased off plans have proven to be a great option for many of our buyers.
The majority of developers will offer a fixed price to work towards, and buyers have the opportunity to get a property under contract before spending time and money on due diligence.
Another bonus of purchasing off plans is that only a 10% deposit is payable once you confirm your due diligence, and the balance is not due until construction is completed.
There is also the potential for value growth, as properties bought off plans are often worth more when the build is complete than the price paid at the start.
Townhouses have attractive features for owner-occupiers and investors alike. They tend to be in convenient locations, close to transport links, parks, schools and shops. In addition, being brand-new, highly efficient, modern builds, there is a lot less ongoing maintenance required.
New build properties also have tax advantages for investors. Owners are permitted to write off interest as an expense, and capital gains tax is only applicable if a property is sold within a five year bright line test period (as opposed to the 10 year bright line period for existing homes).
In addition, banks have more favourable criteria for lending on new builds and loan to value ratio (LVR) restrictions are also more accommodative for new build properties.
In response to the high demand for housing, new developments, both big and small in scale, are popping up to satisfy buyer appetites. Ongoing population growth in our cities and the housing intensification that comes with it means the popularity of townhouses is only set to increase.