Building a New Home - Lock in Pricing Now or Wait for Things to Cool off?

Hi all, we're at the early stages looking at building a new home within a year's time.

With the increasing prices of building a new home, would it be better to sign up now to lock in pricing or wait until things cool off and prices return to normal?

Comments

  • +6 votes

    Would it be better to sign up now to lock in pricing or wait until things cool off and prices return to normal?

    Yes

  • +3 votes

    Crystal Ball says Yes

    • +1 vote

      Crystal Ball says No

    • +1 vote

      My 🔮 shows it is OOS from all these questions , please check back again in the future.

    •  

      Magic 8 Ball says … "Ask OzBargain".

  • +1 vote

    Possibly wait. There is a wood frame/truss shortage which is also putting pressure on steel and causing some time delays

    •  

      yes, aware of the shortages of timber and other materials.

      But is there going to be a case like fruit ( prices fluctuating) that build prices would drop or it's just a case it just keep raising?

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      About them we moved to steel frames. Timber shortage is really narrowing the cost difference.

    • +3 votes

      Once prices go up, they rarely come down….. :)

  •  

    I guess between normal rises and current supply issues, by the time things free up and supply can meet demand, prices may not go back down, perhaps static?? Or the Q is will suppliers just keep the price up causing builders to do the same.

  •  

    Depends if you are going independent builder or through the mass developers like Metricon, etc.

    Independent builders prices vary based on how busy they are. At the moment, they are very busy, so prices are high. When they are not as busy, or see a gap coming in their pipeline, the prices will drop to fill that gap.

    Mass developers prices won't go down as they are working of the lowest price for lowest quality already.

  •  

    Would anyone really lock their pricing? Surely it’ll have some sort of adjustment applied if things rise to much anyway - unless you pay upfront too.

    • +4 votes

      Pay up front and they might just go into administration because it costs them more to build and losing money. Phoenixing is a big problem in the building industry.

      Always go for progress payments tied in with milestones. Get a quantity surveyor if you have to rather pay a few thousand for a QS then lose $10k because the builder short changed you at ever progress payment and find you are out of pocket.

      •  

        Houses are meant to stand for decades. Why not avoid new companies that are barely around?

      •  

        Of course. Paying up front is a big risk. But as a company I wouldn’t be too been to lock a ‘low’ price for something I need to purchase materials for in 12 months.

        It’s not uncommon for extended contracts to have a ‘rise and fall’ clause linked to market indicators for material pricing.

  • +1 vote

    You want to build a new home.

    Have you already got one to live in? If you are renting then weight the difference between continuing to rent or build a new one. Take note of others say about volume vs small bespoke builders.

    Shortage of timber. You might look at taking your plans and get a quote between timber frame and steel frame. Steel frame is 20 - 30% more for frame only (might be a lot less if timber prices have gone up) but benefits is better strength and no need to worry about termites or movement of the frame. Also depends on which materials you are choosing for external walls.

    I've got something similar in the work in about 12 months.

    •  

      yeah, we have something to live in and have had the land for quite a while. So the intention is to build in about a years time.

  •  

    build half now and half later

  • +3 votes

    Hi OP,

    I work in the steel industry. I can't really comment on timber but steel prices are likely to increase further, as import offers for Oct / Nov are higher than prices landed now. Supply shortages will likely take 12 months or so to work through, I would lock in now if I could. Having your own home will be an excellent hedge against the inevitable inflation ahead.

    I think rebar and mesh has increased about 40% since December last year, and has more to go.

    I'd be conscious though of a builder going insolvent. A lot of these increases are borne by the subbies at the moment and could drive some builders to the wall.

    •  

      thanks, we might stick with the bigger builders. Thanks for your insight.

    •  

      I think rebar and mesh has increased about 40% since December last year, and has more to go.

      Interesting point.

      Iron Ore have doubled in (USD$100 to USD$200) price per ton but a ton is a lot of steel. Is it really raw inputs: ore, labour, energy. Or temporary unable to produce enough and get it through the ports vs demand?

      •  

        Things like iron ore pricing are all about demand.

        •  

          Wow. Enlightening. USD$100 additional per tonne doesn't translate to $1000 extra for new cars the manufacturers are passing through. There isn't that much steel in the cars.

  • +1 vote

    Get ready for a major headache dealing with the building companies. Endless stories of contract errors, design adjustments over and over, loads of post-contract variations and hidden costs, needing to continuously chase your admin and supervisor to rectify building defects that are identified by a third party surveyor (i.e. Darbecca)

    • +1 vote

      i know.
      We never wanted to build, know the amount of headaches (post handover ) booking maintance calls and being told defects were within tolerances.

      we were initially looking at buying an existing home but being priced out of the market wasn't fun, so we're taking the lesser/cheaper of 2 evils.

  •  

    Waiting for house prices to fall has worked really well for so many… of course they're still waiting. I guess it depends whether you want a house.

    Surely getting your home built a year earlier is 10s of $1000s in your pocket - how much are you expecting building costs to fall?

  •  

    Metal frame not timber, lock in now. Costs won’t come down. There is a growing shortage of preferred qualified tradies and building is increasing ….