Category Archives: General

“Housing Bubble” – Our Perspective

bubble

Well we thought it was time to put our builder’s perspective on the so called “Housing Bubble”

First things first – what really is a Bubble? To our surprise, we couldn’t find an “official” definition. But our understanding is that a bubble occurs when house prices rise irrationally, backed by artificial demand. The supply then cannot keep pace, and the prices rise. In the current market this “artificial” demand is set to be based on speculative investments because of low interest rates, demand from overseas buyers etc.

The key problem here is that you can only definitively label it a bubble, after the “bubble” has been burst. In the words of JM Keynes: “Markets can remain irrational longer than you can remain solvent.” The alternative view is that this is part of a Boom cycle, and people left watching for a “bubble burst” are left facing never ending price rises.

The reason there is so much talk about price rises is that there has been an average 22% price rise in the Melbourne median prices in the last 3 years. According to the REIV, the median price in Metro Melbourne is $688,000, while the median price in the inner suburbs is $1,164,500

So back to the causes of this boom in demand. While the dramatic rise in overseas buyers and demand from investors are factors, other reasons for the price rise being mentioned is the lack of supply and planning regulations. Comparing our current market to the GFC and the sub-prime crisis, is a bit misleading. The sub-prime crisis was due to lack of regulation, where mortgages were offered to all and sundry, without deposits, and the ability to walk away from a mortgage if it became all too much. That definitely does not seem to be the case here in Melbourne.

The Bubble effect also promises a drastic decrease in prices if the “bubble” were to burst. That, to my knowledge, has never been the case in Melbourne. A gentle, but brief correction does occur from time to time. And also the type of investors being generally blamed, do often have the resources to out ride these corrections, and project a longer term view.

A quick glance through history may prove the point that the inner suburbs, or the “in demand” suburbs” would always have been unaffordable to all, except the top percentage of earners. This is the way it has always worked, and all over the world. Today’s fringe suburb, could be the “in-demand” location of the future, and what seems cheap now, will have been a bargain in a few years’ time.

So, are we calling it a Bubble or a Boom? Unfortunately we at InnoHomes are not qualified to call it either way. But our homes do not just meet our client’s financial needs, but also their physical, social and emotional requirements. Be comfortable in your purchase, if it ticks all these boxes.

Understanding a New-Home Sales process – Part 2

We take up from where we left in the last Blog post.

site costs

site costs

3) Site Costs

This is a favourite cause of frustration from all the feedback we have received so far. How do you account for site costs? In our books, there is no easy way to do it.

In simplistic terms there are two major variables that affect site costs – the slope on the site, and the effort required to reach stable soil. Engineers and builders could tackle these two variables from a wide range of approaches. They are the ones guaranteeing your product, so rule 1 is that they should be comfortable with the approach. Each approach would have its cost, and it may not be the same.

As a Builder, we often have access to engineering reports from new estate developers. These reports do give limited information that is useful for limited estimation of the site costs – slope, fill etc. But the only way to get the correct estimate is to do a comprehensive soil test and contour profile on each plot. For peace of mind it may be worth your while to spend a few hundred dollars on these reports, so that the builders can cost you accurately.

We have heard of some Builders offering fixed site costs without the soil test and contour report. In our opinion this is best described as hedging your bets – some you win some you don’t. Or in other words, the majority of customers are paying more to subsidise the minority who require expensive site works.

It is also very advisable to look at total costs. Over the years we have been exposed to many site works – other builders of Course :) , that make us scratch our heads (putting it mildly). One standout case involved completely cutting out a slope about 3 meters away from the road. The customer then ended up with a driveway 3 meters deep, and large costs for retaining walls (these retaining walls fell very conveniently into landscaping costs and are not normally part of the building contract). It is highly recommended that you discuss the approach that your builder is taking, and feel comfortable in all aspects of this approach.

4) Customisation

In the end all houses have a very similar theme- so many bedrooms, a kitchen, some living areas. What really sets yours apart is the customisation that you do to make it perfect for you. It may be as minor as colours, or as major as structural works. But in the longer term, without these customisations, your house would be a bigger compromise that it needs to be. So make sure the product or design that you shortlist ticks all the boxes you think is important. There are far too many people with regrets, when all it required was a clear head, at the beginning of the process.

And accept the fact that there are going to be variations – it is just human nature. It is impossible to think of everything right at the start. It may be an idea to consider working with a builder who does not consider a variation an opportunity to plunder the customer.

And do not hesitate to think outside the square. Will automation help your lifestyle? Is connectivity important? Is mobility going to be an issue? Thinking of these things may just help you enjoy your house that much longer.

Design your InnoHome

Design your InnoHome

5) Profit Margins

A few clients have told us that they believe that all builders make at least 30% profit, and therefore there should be a lot of room for negotiation. Considering that there are over 2000 builders in Victoria alone, there is a possibility that this could be true for some, but not any that we have met.

Most builders would have 3 components to their price: X (Cost of Build) + Y (Overheads) + Z (Profit)

X is the total of materials and subcontractor charges, Y is where the payments for salaries, advertising, office overheads and the BMW’s :) come from. Z is generally the small profit margin that will ensure that the business will remain a viable business in the years to come (and support your warranty claims if any).

Larger builders are generally able to achieve a smaller X (volumes and buying power), but have a larger Y (more staff and costs). Smaller builders have a more efficient Y, but often pay out more in X. We have only heard of examples and case studies of Builders who give up on Z, just to generate work, but it often comes at a disastrous cost.

If any builder is able to generate a 30% profit, they are in a very lucky place. When this figure includes both Y & Z components, it starts making more sense – for certain builders.

 

We hope, that we have cleared up at least some points for you. Feel free to call us on 1300 722 703 if you need any of these points to be further detailed. And come visit us at the InnoHomes display home at 4 Clovelly Way, Officer, Vic. 3809 to see what this new approach to home building is all about.

 

Understanding a New-Home Sales process – Part 1

A common theme that emerges from our visitor feedback, is the understanding of why pricing seems to be so varied between Builders. This is our attempt to clarify a few common aspects about the sales process:

Internal of House

1) Pricing the house on a per-square rate.

This strategy probably works best as a rough guide only. The two major cost elements into your house are the structural items and the inclusions. The inclusions are visible, so price comparisons can be fairly transparent and accurate. The structure not so much. Standard designs from major builders will have a very lean and efficient structure, to keep costs down to a minimum. Block on Block designs, single roof design, etc. all contribute. This is where custom designs may lose out on. To achieve the design modification that you consider perfect for yourself, we may have to include structural elements like Iron Beams, Complex truss designs etc. This cost is not easily visible to the customer, hence the price per square rate strategy may not apply.

2) Bait Pricing

This is a strategy used to attract customers by luring them with the thought that they will have to pay less for something that costs more. This is often achieved by stripping the house down to the bare minimum needed for an Occupancy Certificate. Although there may be customers who are looking to buy such a product, we haven’t come across very many.

Most builders will price their houses at this minimum, so that they don’t lose out in a basic comparison. If the customer gets it in their mind that the builder is too pricey, it is never a good start. Most builders will then have an inclusion list that the majority of their customers will be happy with. This is probably a better start for comparisons. Also it is very important to factor what is not included. An advertised special may list all the wonderful items that are included, but the bite most certainly is in the items that are not. We have had feedback stating the major cost factors to be in site costs, driveways, cooling, minor customisations, etc. We have also seen quotes from other builders also charging extra for construction costs (scaffolding and temporary fencing!!). The only way to then realistically know what your true costs are, is to get a comprehensive quote on the product. Naturally this is going to be time consuming for both you and the builder, so it makes sense to go through this process if you are interested in the product offering.

In our next blog we will go through a few more of these points, to try and clarify them for you. Feel free to call us on 1300 722 703 if you need any of these points to be further detailed. And come visit us at the InnoHomes display home at 4 Clovelly Way, Officer, Vic. 3809 to see what this new approach to home building is all about.

 

 

 

Concrete Roof Tiles Vs Colorbond Roof

When it comes to roofing materials in Australia, two types are considered more popular than other. These are concrete roof tiles and corrugated metal roofing with a bonded paint finish. The latter is typically known as Colorbond or CB in the country. Both are weather resistant but the homeowner’s taste, needs, and budget also play a very important role when a purchase decision is made.

concrete_roof

Concrete roof tiles have been used in various Australian cities for more than 75 years. Colorbond may be newer, but just as popular. However, there are some key differences which are worth considering when choosing one over the other.

Architectural Merit:
The concrete roof tiles have come a long way from being just a standard half-pipe tile.  While maintaining a traditional look, these tiles are available in a variety of colours. Colorbond has a modern stylish look with clean lines and are also available in a wide range of colours.

Noise:
Colorbond roof is not known for its sound proofing quality. Tile roofs are admittedly much quieter. While you can lay additional soundproofing to dampen the sound of rain and hail on a Colorbond roof, you cannot really get rid of the noise.

Weight:
Colorbond is much lighter than tile roof. Thus, your roof framing is much lighter; rafter spacing can be wider.

Resilience:
Colorbond is more resilient than concrete roof tiles.  So, in case you need to climb on the roof for maintenance work, be more careful on tile than on Colorbond.

colorbond_roofMaintenance:
While there are reports that say Concrete tiles crack easier than Colorbond, it is almost always due to misuse. Also concrete tiles would be the preferred option if you wanted to modify portion of the roof later, for example installing a skylight.

Cost:
While concrete tiles are cheaper than Colorbond, the total costs depends on the roof design,  which includes the trusses, insulation etc. The total costs are normally not significantly different for each of them.

Siting:
Concrete tiles may be a better option in corrosive environments such as areas near the sea etc.

They are both excellent choices, and is truly determined more by personal preferences than any other criteria.

Display Home Opening

We opened our Display Home for public viewing this weekend, to a fantastic response from the visiting public.

When we turned up on Friday for finishing touches, the day turned out to be foggy with a hint of rain. See the view from our balcony on a foggy morning .

Foggy Day view

But the weather turned over on Saturday – the day of our opening. Melbourne put up a glorious day, and we put up an impressive home. Our Ararat 45 showcases the best of our design features:

  • MRL elevator with pass through entry on all levels
  • Upstairs living areas – live with a view
  • Large, modern kitchen with exquisite cabinet works
  • Massive Theatre room with a standard curved screen, and stepped seating, and automatic gaming table.
  • Lots of storage all around the house.

We  recieved very enthustiatic Feedback from our visitors, with one remarking that this was the most impressive house that he has ever seen.

Come visit us, and see for yourself how thinking outside the square can facilitate enjoyable everyday living.

The Ararat45 Display home by innoHomes

Our display home is at the Timbertop Estate Display Village,  4 Clovelly Way, Officer, Vic 3809.

Preview Opening of the Innovative InnoHomes Display Home

We are happy to say that we were able to have a preview opening of our innovative Display home at Officer. Nestled in the gentle valleys, and situated in the plush Timbertop Estate, we were privileged to have the Mayor of Cardinia Shire – Cr.Graeme Moore, and our local MP -Brad Battin, the Member for Gembrook attend. Among the other invitees were folks from the media, and our partners who have helped make this project a success.

Cr.Graeme Moore, Mr. Brad Battin, MP, and Kathy our vivacious real estate agent cut the cake made specially for us by Ninas Cupcakery.
Cake Cutting at the InnoHomes Display Home

While the home is not 100% complete, our invitees were able to experience our design philosophy, our innovatiove space usage, the premium fixtures and yes the elevator. The elevator got a serios workout, with everyone excited to explore all the constructed spaces.

The following is an image of the article published in the The Packenham Gazette:

Article on InnoHomes published in the Pakenham Gazette

Copyright on House Plans

Steer Clear of Copyright Issues When Handling Floor Plans

Construction and copyright – not two words that you would instantly relate to each other, right? Admittedly, copyright infringement is the last thought that comes to one’s mind when thinking about construction designs, especially floor plans. One may be caught completely off guard with such information while trying to remodel their home or office, in case they are unaware of the existence of copyright laws.

We protect our Copyright

We protect our Copyright

Say for example, you buy a new house. It might not be enormous in size but you like the way in which the living area opens into a small balcony and the little reading area just down the corridor. An ever helpful architect on the premises explains every one of your queries regarding the floor plan. Later on, you hand the floor plan to your architect for a remodeling work and he comes up with a design of your liking. And it is just then that you are served with a lawsuit charging you and your contractor with copyright infringement on the original property’s floor plan. Compensation of possible damages might also be demanded.

In order to avoid landing oneself in such unfavorable situation, it is better to have a general idea about architectural copyright laws. Australian law boasts of the most comprehensive coverage of floor plans. The Copyright Amendment (Moral Rights) Act of 2000 amends the Australian Copyright Act, 1911, thereby; providing for individual creators with a couple of new moral rights. Namely, these are the rights of attribution and integrity of authorship.

These rights emphasize that existing copyright owners will receive attribution as authors of their work. They must be identified according to the specifications that they set. These owners are entitled to exercise their rights against false credits of their work. They may also do so if their work is subjected to derogatory treatment like mutilation, distortion, alteration, or anything that is detrimental to the authors’ honour or reputation.

More detail can be found on the website of the Australian Copyright Council at www.copyright.org.au. Their information sheet is available here

Will Your Home Remain Suitable As You Grow Older?

Few Simple Tips to Help Make a House Suitable for when you are Older

Couple ridingWhen buying their dream homes or starting a remodeling project, people rarely think about the time when they will inevitably be faced with an impending old age. It is always about what is needed and how convenience can be enhanced just a little more for the time being. This trend might lead to the aesthetic appeal and convenience getting increased ‘for the time being’; however, very little, if anything, gets improved for the future. The elderly, especially those who are troubled with mobility issues, come across various problems around the house when trying to go about their day to day activities. Everything from turning the doorknob to climbing the stairs might seem like a mammoth task to them.

So, here are a few steps that might be incorporated to make life easier for the seniors within the house:

  • When building a home for elders, it is better to have an alternative to stairs, as many people find it difficult to negotiate them due to conditions like diabetes, cardiac problems, arthritis, etc. Making the stairs less steep with sturdy railings is a must. Elevators are a great alternative to stairs.
  • All floors should be made slip-resistant, wooden surfaces are the best. Rugs and nonskid mats can also be used as alternatives. The floor must be checked to make sure there are no bumps and dents.
  • Lighting is also critical. A well-lit place means better visibility. A dark room is nothing short of an invitation to a bump or a fall. Entryways must also be well lit.
  • It is also important to make baths safer. Dry areas must be kept alongside bath areas. Provisioning for grab bars may also be a good idea. Step in showers are probably the more convenient options than tubs. Installing hand held showers for people with limited mobility is also a wise decision.

Consult us at InnoHomes, we have access to some of the most creative professionals, who can layout your house as you need it.

Mobility Issues Affecting Older Australians

How Mobility Issues Are Affecting the Older Australians Today

When one is in their forties or fifties, they can still crack jokes about needing help while getting out of the bed in the morning, or climbing down the stairs to the front porch in the afternoon. However, those men and women who have already hit their seventies (or even earlier), and need help to do simple activities like climbing stairs, mobility is no laughing matter.

mobility2Research shows that even though the percentage of people needing personal care and assistance for day to day activities is still low, more than forty per cent people between the age 50 and 64, admit that they have problems with moving around, especially climbing stairs due some health problem or the other. Even though these conditions start between the ages of thirty nine to forty nine, the problems escalate with increasing age. While obesity remains a cause of serious concern, other conditions include arthritis and rheumatism. Back and neck problems, diabetes, depression, anxiety, or other emotional problems are also a cause to seriously impede mobility. It is imperative that these concerns are adequately anticipated and considered while choosing a design for your new home.

The first step in overcoming the mobility limitation issues obviously involves getting holistic pain management treatments. The second step would absolutely be about finding the solutions available to help with one’s specific problem or needs. There exists a large amount of potential solutions, due to the advanced technology available at competitive costs now. As it is the home where you would spend most of your time, the construction plan of the property should be integrated to cater to your needs well into the future.

InnoHomes, proudly designs homes integrated with elevators, so that your home is one place where you will not need to struggle.

-Referenced research by Division of Behavioral and Social Research at the National Institute on Aging.