Buying A New Home Versus An Established Home16 Oct 2018
When looking to buy a home, one question buyers face is whether to purchase an established property, or to buy land and build a home from scratch.
While both methods offer significant financial and social benefits, ultimately, the “better” method depends on the priorities of the buyer.
“First you need to determine what your needs or wants are, to be able to determine what’s classed as ‘better’,” says Peter Hill, Managing Director of Origin Projects.
“Consider it like buying a mode of transport. What’s better – a Prius, a motorbike, a sexy two-door sports car, or a Range Rover? They’ll all provide transportation, but do they cater specifically for your needs?”
We looked at the pros and cons of each method, allowing buyers to determine the option that best suits their lifestyle and financial position.
Buying an established home offers several key benefits that appeal to buyers.
Generally, an established property will be located closer to a city centre than a new home (as vacant blocks are rare in inner-city areas), and therefore be nearer to facilities and infrastructure such as schools, employment opportunities and public transport.
Buying an established home is a quicker process than building a new house. Once the initial house hunting is done and the deposit has been paid, buyers can often move in and start their new life in as little as 30 days.
New homes, on the other hand, require months to build and have the potential extra burden of delays and complications. Because of this, many buyers will need to continue renting another property while their new home is being built.
Purchasing an established home also offers buyers a good understanding of the design, style and price point for other houses in the area, allowing them to understand the home’s future financial value.
Established Homes at a glance…
Closer to the CBD and established infrastructure
Potentially better investment potential
Potentially larger land parcel
Comes with established landscaping
Can move in quickly
Buying land and building a new home from scratch or purchasing newly completed homes offers several unique benefits not offered when purchasing an established property.
Many first homebuyers are drawn to this option due to the savings and concessions available, such as reduced stamp duty and the First Home Owner Grant.
“If you choose to use your new home as an investment property, you can claim depreciation quite rapidly over the first few years, which is a good tax benefit to take advantage of,” Peter said.
As a new home is more likely to be built to a higher energy efficient standard and carry fewer maintenance issues than an established home, there’s also the potential ongoing savings.
An architecturally designed home utilising responsible building practices like natural ventilation, solar panels, grey water systems and one that takes full advantage of winter sun in any area will always appreciate in value.
“You have a house that you won’t have to put any money towards over the next few years. Everything is nice and new, so there is no work to be done,” Peter says.
Of course, the major drawcard of building a new home is the creative control this offers buyers.
“You decide where the fireplace goes, what cladding you use, how big your entertaining area is,” Peter says.
This method of buying can be particularly rewarding, and arguably gives vendors more bang for their buck.
“Often you get a lot more for your money. Sure, a two-bedroom unit might be cheaper but it’s pretty awesome having a new home that’s built exactly how you want it to be,” says Peter.
And while building may be the more time-consuming process, it can save buyers several weekends of time spent at inspections, auctions and negotiating with agents.
There can be far less competition in buying a block of land and building your home than an existing home. Many people are turned off by the stress and cost of building, however if you’re looking for a home to raise your family and live in for decades, the new build can be a fantastic option.
Home designs and sizes have changed dramatically in Australia over the last 20 years, so by building a new home, you can create the exact floor plan that you desire rather than taking on the costs involved with creating an open floor plan in an existing property with an out-dated design.
New Homes at a glance…
Can be built to your exact specifications
Lower ongoing costs in terms of maintenance and energy
Significant buyer incentives such as the First Home Owner Grant
Less competition to buy land
Issues and defects covered under warranty
Developing Communities – Not Just Property.