The True Cost Of Delaying Your Build

You’ve found your ideal block of land to build on and after months of design changes and quotes…and requotes and changes…you now have the final price to build your dream home!

However, there is a problem.

It’s a bit more than you wanted to pay.

Your original budget is nothing more than a distant memory, destroyed by all those increases in the cost of labour and materials.

So what do you do?

Do you bite the bullet and commit?

Or do you ‘wait and see’ in the hope that prices will come down.

Or maybe even play a bit of hardball with your builder and try to negotiate the contract price.

To help you to make the right decision that takes into account your own personal circumstances, here are some insights into what is currently going on behind the scenes in the construction industry and how that may affect your decision to commit or delay.

However, I need to start off by addressing a myth that could lead to some severe financial consequences for anyone that believes it…

Misconceptions about Cost Reduction

After the dramatic rise in the cost of timber and steel throughout 2021 and 2022 we are now seeing a reduction in the cost of those materials which has led to a lot of people outside the industry confidently predicting that the cost of building a new home will reduce in the coming months.

Unfortunately what these people have failed to take into account is the effect inflation is having on all other materials which is negating any decrease in the cost of timber and steel.

Additionally, we have seen an explosion in the cost of salaries in the construction industry which is fuelled by unprecedented demand resulting in employers having to offer huge incentives to bring people in to fill their vacancies.

Those two things combined have resulted in the cost of construction continuing to increase, albeit not at the same rate as 2021 or 2022 when prices rose by around 20% per annum.

The fact is, prices will not be going down, so if you do delay your build, then your building contract will be repriced and you can expect to see the cost increase significantly.

Which has led some consumers to try and negotiate the contract with their builder.

To Haggle or Not To Haggle…

There is nothing wrong with trying to drive down the price of anything, in fact, there is nothing I like better than putting the squeeze on a car salesman!

That’s because a car is a commodity, and if I don't get the price I want from one dealer I can easily go somewhere else and negotiate with them for the exact same product…

However, a home is not a commodity, and no two builders will build the same home of the same quality with the same materials. Which is why it is almost impossible for a consumer to compare two different quotes from two different building companies even if they relate to the same plans and specifications!

The fact is, all builders have access to the same materials and the same pool of labour which means when they build to the same quality there is very little difference in their cost to construct a home. 

This is why you should be very careful about making any decision based on price alone. The builder with the lowest quote is typically the builder that is most desperate for cash flow.

Porter Davis provides an excellent example of this when they slashed their prices by $50,000 in an attempt to generate deposits before entering voluntary administration just a few months later.

The Risk of Losing Your Build Slot

Another thing to consider is that the best builders are like the best restaurants, they are booked out in advance.

Some builders may be booked out for 12 to 18 months in advance. So if you are thinking of delaying the start of your build for a few months while you assess where interest rates are going, you could lose your build slot which will result in you having to join the back of a queue.  And with an average wait time of around 14 months for the best builders, that could mean you are still two years away from living in your dream home.

And don’t forget, when you reach the front of the queue and construction is about to start, your contract will still have to be repriced in order to take into account any price increases.

At the end of the day, it doesn’t matter if you are building your first home or if you have built many times before…

Designing a new home can be very overwhelming and when you hear new things for the first time, it's not easy to remember everything.

All the tips I’ve covered here are just a small sample of the information I need to share with you to ensure you are well-informed when you get started on the design process... 

Which is why I put together a quick guide for you to download. 

The 7 Things You Must Know Before Designing A New Home.

It’s completely free, and it will help you to avoid any nasty surprises that can sneak up on you when building a custom home.

Just click on the link below and let me know the email address you'd like me to send it to.