NEW BUILDS: THE GOOD, THE BAD, AND THE UGLY

In recent years incentives to build or to buy a new build have multiplied. It is easier to get a loan for a new build, for example, because the Reserve Bank’s loan-to-value ratios, which limit bank lending to low-deposit borrowers, do not apply.

Incentives are also being thrown at investors to buy new builds. They are exempt from the Government’s new tax wiping out mortgage interest as an expense against rental income over a four-year period, and the bright-line test stays at five years instead of the stretch to 10 for existing homes.

So how do build costs compare? There are a range of figures from different sources, but multiple variables make it difficult to compare. The general consensus is new builds remain cheaper than existing properties.

Information from CoreLogic provides some evidence of that. It shows