Benefits of building versus buying established
Building a home might feel like a herculean task, especially if it's your first. But there are some very real advantages to building over buying an established home.
Let's break them down in simple terms.
The price of a house is a hurdle to entering the market, and established dwellings are usually more expensive from the get-go. Built homes are typically more affordable for first home buyers, due to a couple of key factors.
Firstly, construction on new estates is generally further out of the city in designated developments. Because the full range of amenities and infrastructure is still in progress, the cost of land is usually less than a new property in a high-density urban area.
Secondly, there are a range of financial incentives exclusively available for new homes versus existing dwellings, including reduced stamp duty and the First Home Owner Grant. For a construction loan you only need 5 per cent deposit until your land titles (which gives you another 12-18 months to save the remainder of your deposit).
There are considerable stamp duty savings for people purchasing house and land packages. Stamp duty on a land only transaction is minimal (well below $10,000), compared to the stamp duty payable on an established home (in the vicinity of $30,000 - $40,000 for comparable sale prices). There are also stamp duty concessions for first home buyers.
A major advantage of a newly built home is creative control.
It can cost a fortune to safely and stylishly adapt an established home to the needs of an individual. You might find the perfect place – except for that one feature that costs an arm and a leg to remove or relocate.
When you build new, you decide the specifications; how many storeys, how your bedrooms are configured, what kitchen layout you prefer, what type of tiles and carpet you use, and everything in between. You can lock down what you need now and plan ahead for the future, saving you the cost of selling and re-buying in later years.
Read more: What are site costs?
Older properties are often full of appealing character, but that character comes at a cost – ageing materials crying out for modernisation.
If you buy an existing home (even if it’s less than five years old), you’ll invariably need to do some general maintenance to ensure the property is in perfect working order before you settle in.
New homes will meet the most up-to-date building codes and boast the latest in modern features and finishes. You won’t have to face major fixes, such as structural issues or failing heating systems. And if issues do arise, these will generally be covered under warranty. Plus, the money you save can help you pay off the mortgage faster.
While building can be rewarding, it takes longer than buying an existing property ‘off-the-shelf’ and can feel daunting if it’s your first time. The upside of this challenge is that it’s not a process for everyone, and the numbers of people buying land and building are fewer than those opting for instant home gratification.
This translates into less real-world competition for your ideal block of land and dream home, and a less torturous process than vying against other buyers at auction after auction.
Read more: Questions to ask your builder
Energy costs can be an enormous burden for households, with the average Australian home producing tonnes of greenhouse gas emissions annually.
Newly built homes take advantage of the latest in materials and technologies, which can offer huge relief for home owners – and the planet!
New homes can fully utilise passive design (using the natural elements, such as tree shade, to manage internal temperatures), then there’s the added benefit of all new, energy optimised appliances, energy-efficient glazing, and the latest in heating and cooling technologies.