To buy or build? What's the best choice for first home buyers in Christchurch?
When it comes to getting into your first home, one of the biggest questions is often “should we buy or should we build?” In Christchurch and the wider Canterbury region, there is no shortage of choice for either – from gorgeous character villas in the older suburbs to brand new sections in Rolleston, Rangiora and Halswell.
Let's take a look at both options, along with the local Canterbury factors you will want to consider before deciding.
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New builds
One of the biggest perks of building or buying brand new is exactly that – everything is new. You are the first to live there, so it is simply a matter of moving in and enjoying the property. There is less fuss, less maintenance and a new home will likely be warmer and more energy efficient than an older one.
New builds also tend to get more favourable treatment from lenders. Owner-occupiers can often purchase with a lower deposit than they would need for an existing property, and new builds are generally exempt from the Reserve Bank's debt-to-income (DTI) restrictions. This can significantly improve your borrowing power compared to buying an existing home. Policies do vary between lenders, so it pays to get advice early.
There are two main ways to build a new home:
- Land and build packages: You secure the section first, then choose your builder and tradies, funding both the land and the build as construction progresses. The major benefit is control, as you are in charge of the design from start to finish, tailoring the home to your lifestyle. That said, managing the process can feel overwhelming, and there are risks to be aware of such as budget blowouts and cash flow pressure if you are renting, paying a mortgage on the section and funding construction all at the same time.
- Turnkey homes: You pay a deposit upfront and settle once the home is completed. The developer owns the land and funds the build during construction. This is the more straightforward option. You won't start mortgage repayments until settlement, the design is already finalised and you largely opt out of the hands-on build process. Choosing the right developer matters enormously, so look into their reputation to ensure the project is likely to proceed as planned, timelines are realistic and there is no history of unexpected cost increases.
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Understanding TC land ratings in Canterbury
Building in greater Christchurch comes with one consideration that is unique to this region: Technical Category (TC) land ratings. Following the 2010/2011 Canterbury earthquakes, residential land was assessed for liquefaction risk and classified as TC1, TC2 or TC3.
- TC1 land has minimal liquefaction risk and can generally use standard foundations.
- TC2 land carries moderate risk and typically needs an enhanced foundation.
- TC3 land has the highest liquefaction risk and requires a site-specific geotechnical investigation and a custom engineered foundation, such as deep piles.
TC3 doesn't mean land is unsafe or unbuildable (most established developers already factor the engineering into their build cost) but it is worth understanding, especially with a land and build package where you are managing more of the process yourself. TC ratings are listed on a property's LIM report and are also searchable on the Christchurch City Council website.
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Existing homes
Buying an existing home comes with its own perks. The neighbourhood is already established, landscaping is more mature and you can clearly see the infrastructure around you, such as schools, bus routes, parks and shops. Older Christchurch homes are also often on larger sections than new builds, which is worth keeping in mind if you want space for the kids to play or are considering a minor dwelling down the track.
On the downside, older homes may need renovation or updating to suit your family, and can come with higher heating and maintenance costs. There is also a greater chance of needing repairs sooner, which can add to unexpected expenses. A building report, a check of the LIM report and a look through the earthquake repair history can help avoid costly surprises.
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Key things to consider
Budget is usually the biggest deciding factor between buying an established home or building new. Because lending rules like the DTI limits apply differently to each, a mortgage adviser, like our team at Loan Market Agile, can help you run the numbers to see what you could comfortably borrow across a wide range of lenders.
Your long-term goals matter too. How long do you plan to stay in the property? Will it suit your needs over time? If you are planning to grow your family, is there enough space, and are you in a good school zone? Does the layout work for how you live now and how you will live in five or ten years?
Resale value is worth thinking about even if you are not planning to sell anytime soon. What is the neighbourhood like, and is it in demand? Is the property likely to appeal to a wide range of buyers? Could you add value through renovations later on?
Location within Canterbury is its own consideration here. Christchurch's growth areas (including Rolleston, Lincoln, Prebbleton, Rangiora, Kaiapoi and Halswell) each offer a different mix of commute time, section size and price point. A shorter commute usually comes at a premium, while areas a little further out often mean more house and land for your budget.
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Which path is right for you?
Whether you decide to buy an existing home or build new ultimately comes down to your long-term goals, your budget and how comfortable you are managing the build process.
There are pros and cons to both sides, and we are here to help you weigh them up. With options across Christchurch city and the wider Canterbury districts, we work with buyers every day to help them secure a suitable loan for both established homes and new builds.
Book a free appointment with the team at Loan Market Agile today, and let's chat about what options suit you best.
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