Your home, 1986 — more choice, higher prices

Press, 14 December 1985, Page 14

Your home, 1986 — more choice, higher prices

V° ur own home? This popular, three-bedroom house now costs $6B 816 December inflation and GST will have pushed its price up to

In Residence

with

Bill Harrison

$2O an hour for tradespeople. Add 10% for GST after October

Many readers will be contemplating home ownership, or just simple home improvements in the new year. They will be required to make investment decisions that must be based on good information and sound advice.

The advice that, “The time to do anything is now,” is as relevant today as it ever was.

I have just been asked the inevitable end-of-year question, so in a moment of seasonal madness I will offer some thoughts for the New Year.

Indicators point to 1986 being a vintage year for home-makers. As decreasing demand increases competition it could well be “The Year of the Buyer.” The recent flurry of new building product launches shows that buyers in 1986 will be given some magical options of choice:

© New wallpaper selections with a lot of dash. © Paint systems with builtin ultra-violet screen to protect your house from sunburn.

• Cement-fibre boards that minimise maintenance and speed construction. ® Vertical Venetians that are a decorator’s technicolour dream.

0 Cooking tops, once seen only in such variety in glossy magazines. ® Sky-lights, hi tech roof windows that answer a designer’s prayer. And, soon to be seen, range hoods, activated automatically by smell sensors. The list grows almost daily. Fantastic choices, but at what cost?

Wise buyers will use their recent pay rise dollars to buy before price rises reflect increased labour cost, and offset any Kiwi dollar value benefits.

Buyers must expect to pay more than $2O per hour for a tradesperson’s services, and be prepared to add 10 per cent for G.S.T. after October 1, 1986.

Realisation seldom matches expectation, so buyers waiting for a miraculous increase in their purchasing power after G.S.T. may be disappointed. The effect of cost increases could see the building cost inflation figure four or five per cent ahead of the Consumer Price Index figure in the last quarter of 1986-87 as tax.changes are made.

The effect on a popular, three bedroom home of 925 sq. ft that can be purchased on a fixed price contract today for $54,400, may well be an increase in the price to $68,816, in December 1986 when inflation and G.S.T. have been added.

First-home buyers will be heartened by the Minister of Housing Mr Goffs acknowledgement of the G.S.T. problem. The answer may well be suspensory loans for modest income new home buyers to bridge the deposit gap widened by the imposition of 10 per cent G.S.T. The joy of home ownership has become less joyful for many this year as interest rates rose, but such is the inherent instinct of New

Zealanders to own their own homes that they kept building permit applications flowing in, regardless.

However, the now declining mini-boom in house building — 23,998 dwellings recorded in the September 1985 year — failed to reach the 1974 high of nearly 40,000 dwellings. The Building Industry Advisory Council predictions are for housing starts to

decline to between 17,500 and 20,000 by next March. Improbable as this prediction may now seem, it could well prove to be correct if the spec, or stock houses presently being offered fail to sell readily. Statistics are now showing a buyer preference for larger flats and smaller houses.

No-one is predicting just when mortgage interest rates will drop, but a 2 per cent drop by the end of 1986 is possible. In many cases this would be reflected only in a shortening of the mortgage term that was lengthened to ease the pain of

; V: M-l repayments,. as interest i rates rose. ' . j( •• ‘ 4 Equity sharing, a system ! of home financiing widely accepted in the . United ;. States and recently intro- ■ duced in New Zealand by.'Mr Goff, should find accept- i ance with first-honte seek- J ers with limited incomejand i savings, once they Under- !; stand the benefits bfjthej scheme. • j 4

The Home Ownership I Saving Account scheme has <' been promised a review 'to ensure that its benefits;are correctly targeted. It will be/ hoped by many with t maturing accounts that‘the review will not make this 7 essential key to hoirne- J ownership harder to turn; ; Prudent buyers will shop * around and benefit from:a ' greater product range,' in- f creased competition, and $ price adjustments. But. be sure to compare like with J like. \

When seeking several *• quotes always use the shine ? specification and check ’ what is included in 1 the } quotation; i.e. cartage, • travelling, warranties, be- $ fore accepting on the false < assumption'that your every J wish has been included in the lowest quote. j ? ‘ And, be prepared to wait. . Good, skilled, tradespeople - will always be busy. ‘ To all Home Line readers I extend a wish for good ' buying in 1986. " “• < t i*——i—a—’