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Benefits of building a new home

What’s better – an established house or a brand-new property?
We asked our experts to weigh in.

When looking to enter the property market, one question all buyers face is whether to purchase an established home or buy land and build a home from scratch.

Let’s review the pros and cons of each, so you can confidently determine the best option to suit your lifestyle and financial position.

Location

Established Homes are generally closer to the city and to facilities, infrastructure, schools, public transport.

On the flip side, as inner-city vacant land is quite rare first home buyers are typically drawn to the outer, fringe suburbs where land supply is greater and more cost effective.

Speed

The process of buying an established home is traditionally a much quicker process. Once the house hunting is done and the deposit is paid, buyers can move in immediately after settlement occurs.

Building a new home can be a much longer process however, as it takes time to move through the sales, administration, and construction phases of building. Furthermore, there can be unforeseen delays with bad weather and trades or material shortages.

Current Market Conditions

For a first home buyer, buying an established home in the current market is incredibly challenging. With unprecedented times, we have such a low volume of homes available for sale and an insanely high demand for homes. This means it is incredibly competitive, homes are being sold within a matter of days or even off-market and sale prices are tens-of-thousands-of-dollars higher than the asking price. This makes it harder to save a deposit, as you can guarantee you’ll need a decent contingency in your back pocket to pay well and truly higher than the asking price.

As for new builds, there is no sugar coating it. On the back end of Government Stimulus and all the Government Grants that were in market to encourage the construction of new homes, it has had a significant impact on the building industry. With longer lead times, the average single storey home is currently taking 12-18 months to complete. On the contrary, it is far easier and less competitive to build a new home than buying established.

Finances

In short, established homes are likely to cost more.  A much higher deposit is required, with most banks needing a minimum of a 5% deposit and there isn’t any Government Grant’s available for First Home Buyers.

Building however only requires a small 2% deposit and First Home Buyers are eligible for a $10,000 first home buyer grant!

Cost of Running

Older, established homes are likely to require more maintenance. There is always a need to service or replace systems, appliances or attend to property repairs as there is simply more wear and tear with an existing home which has already been lived in. If the property has been neglected for some time, there is a need to carefully do your due diligence as you simply don’t know what you are buying, and you could subsequently inherit a significant amount of issues with the home. If the established property is sitting on a larger parcel of land, then there will also be more garden upkeep. They can also be more expensive to heat and keep cool.

The good thing about building a new home is that all new homes must comply with a minimum 6-star energy efficiency rating. What this essentially means is that it is more cost effective to live in and run. New builds come with a 6-month maintenance period and a 25-year Structural Warranty. You also have the added advantage of designing your gardens with sustainability in mind, so there is minimal upkeep.

Design

It goes without being said, but when you buy an established home there isn’t much say in the layout of the floorplan or the colour or types of your finishes throughout. Unless of course, you undergo significant renovations on an established home. 

When you build a new home however, you have the exciting ability to select your own floorplan and design to suit your lifestyle. You can customise the layout and make lots of changes to suit your personal preferences. You can pick all the colours and finishing items throughout the home. The final result is likely to leave you feeling very proud and accomplished.

 

In summary, when weighing up both options here is a brief overview of the differences between buying an existing property and buying land and building a new home:

Criteria

Established Home

New Home

Choice in location

Yes

Yes

Choice in design

No

Yes

Ability to make changes

No

Yes

Maintenance Period

No

Yes

Structural Warranty

No

Yes

Move in time (weeks)

12

52

Government Assistance

No

$10k

Stamp Duty

Some

Yes

Deposit

5%

2%

Capital Growth

3%

8%

 

While both methods offer significant financial and social benefits, ultimately the ‘better’ method depends on the priorities of the buyer.

Aussie Living Homes has built a strong reputation since 2008 and helped over 3,500 West Australians stop renting and move into their own home. We understand how challenging it is for First Home Buyers to enter the property market, now more so than ever. With Aussie Living Homes, you could be in your new home from as little as $239* per week.

Take the first step towards home ownership and contact us today.

*Terms and conditions apply.

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*Finance provided by Harrisdale Pty Ltd trading as The Loan Company ABN 59 088 462 140 (Australian Credit Licence Number 386355). Lender credit criteria, terms and conditions, fees and charges apply. Your full financial situation would need to be reviewed prior to acceptance of any offer or product. BCN 10805.

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