New build homes as investment: why it's a smart choice

There are so many options out there for investment that it can feel overwhelming to make a choice. But there’s one choice that stands out as an incredibly popular one for New Zealanders: Property investment. According to the Reserve Bank of New Zealand, housing constitutes over half of all domestic household assets. Why is this such a popular choice? Well, based on historic performance, the current level of investment in housing can be explained by its relatively robust financial returns over the past two decades (RBNZ, 2022).

Of course, like any investment, property comes with its risks. Downturns in the property market can have real effects on the value of your assets, and issues with old houses can be costly to fix. For many property investors, new builds are a way to minimise risks and maximise returns. Here are a few reasons why new build homes might make a preferable property investment:

Attractive and Modern Design:

One of the key advantages of purchasing a new build property is the contemporary design and features it offers. New builds are built with the latest architectural trends and construction techniques in mind, ensuring that they meet modern standards. This can be a significant draw for potential tenants or buyers, as they often seek properties with up-to-date amenities and a fresh aesthetic appeal. It also means that you are in a position to charge premium rent for your property.

Energy Efficiency and Healthy Homes Standards:

New builds are designed with energy efficiency and sustainability in mind. They incorporate features such as insulation, double-glazed windows, and energy-efficient appliances, resulting in lower utility bills for both tenants and landlords. Moreover, all of these features mean that your property will be warm and dry. The healthy homes standards introduced in July of 2019 mean that there are now specific and minimum standards for heating, insulation, ventilation, moisture ingress and drainage, and draught stopping in rental properties (tenancy.govt.nz). New builds will automatically meet all of these standards meaning you are meeting all of your obligations as a landlord.

Minimal Maintenance and Repairs:

Investing in a new build property means you start with a clean slate. As the property is brand new, the likelihood of major maintenance issues or repairs is significantly reduced compared to older properties. This translates into lower ongoing maintenance costs, freeing up more of your time and resources for other investment opportunities. Additionally, most new builds come with warranties that cover structural defects and building issues for a specified period. This provides peace of mind to investors, reducing potential maintenance and repair costs in the early years of ownership.

Rental Demand and Potential for Capital Growth:

New Zealand's population is growing steadily, leading to increased demand for housing. Investing in a new build property positions you to meet this demand, especially in desirable locations. New builds often attract quality tenants seeking modern, well-equipped properties, increasing the potential for consistent rental income. Additionally, being an early owner of a new build property provides the opportunity for capital growth as the property appreciates in value over time.

Feel Good Factor:

Research shows a link between cold, damp and mouldy homes and negative health outcomes, particularly for illnesses such as asthma and cardiovascular conditions (tenancy.govt.nz). Landlords in New Zealand have a responsibility to provide safe and healthy homes. By investing in a new build, you contribute a warm home to the country’s rental stock and can feel great about the quality of housing you’re providing.

Tax Benefits:

Investing in a new build property in New Zealand can offer certain tax advantages. Depreciation benefits may be available on new build properties, allowing you to claim deductions on items such as fixtures, fittings, and appliances. It's a great idea to consult with a property accountant to fully understand the specific tax benefits applicable to your investment.

From the attractive design and high-quality construction to energy efficiency and potential for capital growth, new builds offer a range of benefits for investors. Considering the demand for housing, minimal maintenance costs, and potential tax advantages, a new build property can be an excellent addition to your investment portfolio. House and land packages are an easy way to get started. As always, it's essential to conduct thorough research, seek professional advice, and assess your financial goals before making any investment decisions.

Contact our team to learn more about current investment opportunities: https://www.davidreidhomes.co.nz/our-locations 

David Reid Homes is not a registered financial advice service. This article serves as a general resource and should not substitute personalised advice from a qualified financial advisor. Consult with professionals and undertake careful consideration before committing to any property investment.

Full RBNZ 2022 report available here: https://www.rbnz.govt.nz/-/media/fd9fa649c29340d7b9f466ba41bf8d9e.ashx 

Read more about NZ Healthy Homes Standards here: https://www.tenancy.govt.nz/healthy-homes/about-the-healthy-homes-standards/