Here in a Australia the federal government has in place a New home buyers scheme, where you get $7000 when you buy or build a home for the first time. Due to extremely poor opinion polls, voter backlash in recent state elections and a down turn in the economy, especially the building industry the federal government last week increase the first home builders grant, you now get $14,000 if you build a home and $7000 in you buy an existing home. We have been unsuccessfully looking to buy now for months and our lack of success has in part been due to the market on existing house being ridiculously expensive. Now the question is should i start investigating and looking into building or should i stick to my preference of buying and existing old character villa? Smegma ------------------ "Repression never did me any harm (I finally ceased to include "stop masturbating" as one of my guilt ridden New Year's resolutions, but that's a different topic)." Achebe - programmer by day, Mrs Palmers Husband by night
Smeg, I've been considering building a house myself. Of course, the situation in Australia is going to be different from here in Houston. However, I think the effect of the middle man is universal. The reason why it would make sense for me to build a house is that my father is a contractor. He can act as my general contractor and hire my electrician, my foundation pourers, etc (and help me with framing, painting and the rest of the easy stuff). More importantly, the bank will give him a builder's loan I can use to fund the project. What this means on the bottom line is I can cut out the expense of a general contractor and (we've estimated) save about 30% on the total expense of the house, not counting anything I save by doing work myself. Moreover, I'll be taxed at the value of the builder's loan instead of the actual value of the house. However, if I didn't have that connection, I wouldn't save any money. It apparently costs about as much to build a house as to buy one, plus it's a bigger pain in the butt. ------------------ RealGM Gafford Art Artisan Cakes
Th economist in me would say that this is a pretty dumb program. (And please don't take offense -- our government does a lot of dumb things to. ) Across the board subsidies like this rarely work -- because they change the market conditions they are trying to help. Unless there is a huge surplus of used houses on the market, and according to you, there's not, all they accomplished was to drive the price of used houses up by $7,000 dollars. The $14,000 to build is more helpful to you, but again, this probably has driven up the cost of new construction because: 1) people are selling their old houses to first time buyers and building new ones, and 2) first time owners taking advantage of the higher amount. (#1 is probably the reason they increased the subsidy on new houses.) I don't think the subsidy would help as much as they suggest -- because it will drive up prices. Rental houses will be harder to come by as well, if people opt to sell them off. The cost of renting apartments should be eased though -- I'm surprised apartment owners didn't protest. Since the program is new, it might be to your advantage to wait it out. If it continues, prices should level out, especially on new construction. If it stops -- prices on housing will drop soon after, so it might be to your advantage to wait a few years in either case. I don't know anything about your market beyond what you've said. I majored in economics, and we spent a lot of time on government subsidies -- but without looking at that market, I'm really just guessing. I'd check with a real estate agent you can trust, and get his/her opinion on what's going on, and if the subsidy is expected to stick. ------------------ Stay Cool...
DC Sports, IF you already own a house you cannot sell and get the grant for building a new home, it is a first home owners grant, in other words one or the other and then thats it. But i do agree it house prices for existing homes are through the roof, the $14,000 was just introduced last week, so with my preference in old homes, i hope it should slow the ever increasing prices as people increasingly build. Smeg ------------------ "Repression never did me any harm (I finally ceased to include "stop masturbating" as one of my guilt ridden New Year's resolutions, but that's a different topic)." Achebe - programmer by day, Mrs Palmers Husband by night
What I meant was that people who own homes now are likely to take advantage of the tight housing market, driven by the incentives, sell the house they have now (to a first time buyer), and buy a new one. This type of people will be looking for upgrades, so they are going to put even more pressure on the housing market. Assuming a number of them go for newer, bigger, houses, and many will build these new houses, they are going to drive up the cost of new construction. ------------------ Stay Cool...
