With COVID-19 affecting many parts of the economy, you might be thinking this is not a good time for building a home.
It might surprise you, but we think the next 12-18 months are looking positive when it comes to home building. This includes new residential homes, luxury houses and townhouses, as well as renovations.
There are a couple of reasons we are thinking this way.
Real estate perspective
From this viewpoint, we know from our experience that when the market recovers following a downturn, people are on the lookout for new housing stock. New homes however are usually in short supply – which tends to push up prices.
Our experience during both the GFC and the 1990s recession bears this out. After the GFC for example, there were some really good sales results for well-built quality properties. An example of this is five townhouses we built in Lane Cove, which attracted higher prices per square metre than similar properties prior to the downturn.
Builder’s perspective
There’s little doubt that some tradies will drop out of the market during a downturn. This means that once the post-recovery period arrives, there will be fewer tradespeople around. This decreases competition which in turn puts pressure on trade prices.
This factor indicates that post-recovery is not really the best time to be building, due to higher costs. Right now however, tradies are likely to offer some good value for money. And no doubt there are many tradespeople that would appreciate your custom as it could help keep them in business!
Another factor to consider is council approvals, as these are also likely to increase once the market recovers which can slow down approval timeframes.
Call us to discuss building a home in 2020
So overall, we are feeling pretty positive about building during COVID-19 and the economic downturn. If you would like to know more and understand how carrying out a “Critical Factors Analysis” is the best way for you to obtain a full understanding of your project and get the most accurate pricing we would love to hear from you – don’t hesitate to get in touch! Or find out more here.
