13 Sep 2021

Pressure on construction work changing way houses are sold

2:23 pm on 13 September 2021

A real estate agent says construction industry volatility is spurring developers to sell finished homes instead of off the plans.

New residential construction home from brick with metal framing against a blue sky

Photo: 123RF

The supply and price of construction materials are under huge pressure, particularly while Auckland remains at alert Level 4 and the rest of the country lower.

The head of Lodge Real Estate in Hamilton, Jeremy O'Rourke, said some builders who had been happy to forward sell were having a rethink.

"Just had a couple of developments wanting to actually wait until the property is finished," O'Rourke said.

"And we've had other builders who've just started voicing the fact, 'Hey listen, the supply chain is uncertain, the build cost is uncertain, so maybe it's something that we've actually got to look at the finished product rather than try and price it out now'."

Supply chain problems were starting to play a bigger role, he said.

However, that should not cause any delays in building the actual homes, he added.

"It means there's not property available now that we would typically have available, but it's going to be available for sale at the same time that it would be available for settlement.

"It's good for the buyer who is prepared to wait and see what they are actually getting."

These developments are typically turn-key deals in which the buyer pays upfront a fixed price, as opposed to building contracts, which usually have clauses in them that allow for the builder to charge more.

The Master Builders Association recently began advising its members not to remove these clauses from its standard contract, because of the volatility of materials prices.

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