Pros and cons of building a new home or buying an established home
Making the leap onto the property ladder, whether that is buying an established property or building a brand new home is among one of life’s biggest decisions.
There are positives and negatives to both scenarios, and to help you make an informed decision we have narrowed down a list of pros and cons to guide you in your home buying journey.
Building a new home
Create your dream home
Building a new home allows you to bring your dream home to life for now and into the future. You get to choose the layout of the floorplan, the placement of bedrooms, the size of your kitchen, whether you want a home theatre, study or extra-large entertaining area.
You also get to choose the colour of your walls, benchtops, tiles and bathroom fittings so that your house is truly yours. It is a fun and rewarding journey watching your brand new home come to life.
Government grants and finance
When buying an established home you are required to pay stamp duty on both the land and house that you are buying. With a new home, you are only required to pay stamp duty on your block of land, which is a considerable saving.
Also, if you are a first homebuyer you might be eligible for a $10,000 First Home Owner Grant from the State Government.
In addition to Government grants, when building a home, the home loan is usually in the form of a construction loan where you pay incrementally as the build of the home progresses, rather than forking out a large lump sum when buying an established home.
To find out more about home finance, you can read our First Home Buyers finance article here.
Brand new fittings
When building from scratch, your new home comes with warranties for a variety of aspects including structural, electrical fitouts, plumbing and flooring, to name a few. These are a safeguard for the very small chance that something goes wrong with your new home build. This gives you comfort that you are protected from paying big repair costs if something in your home breaks or is faulty.
When buying an established home there is greater risk of faults/broken fittings that you may not notice until after you have bought the property and you risk footing the bill for any expensive repair costs down the track.
Lower running costs
New homes are designed to be energy efficient and are built with energy efficient lighting, a passive solar design and can be fitted with solar power panels to save on utility bills. It can be costly to install these features in established homes if they aren’t already in place when you purchase the property.
It takes time to build a quality home and patience is needed when watching your dream home take shape. You also have to factor in weather issues, such as rain and storms, which can delay construction times. Established homes can often be moved into quickly and in significantly less time than a newly built home.
It takes a lot to make a new house a “home.” Creating a garden, an alfresco area, internal painting, completing driveways, fencing and paving are often not part of the package deal when building a new home.
This can add time and costs to full completion of your home.
Buying an existing property
Move in ASAP
Generally speaking, once you purchase an established home and settlement and finance is complete, you can move in and enjoy a place of your own. This can be as quick as 30 days in some circumstances.
Location, location, location
There are more opportunities to find a home that is closer to the city if you choose to go down the established home path. It might mean a quicker commute to work, and being closer to schools, the beach and public transport hubs.
Most of the time, an established property is set on a larger block. This is ideal for the great Australian dream of a big backyard, or it could mean future subdivision potential in the years to come. Perhaps you could build an investment property on the block, or a granny flat for ageing parents, teenage children or a home office?
You know what you are buying first hand
Purchasing an established property means you can see exactly what you are buying right from the start and you can physically walk through and experience the feel of the home before you buy.
Finance and other costs
Typically, a bigger deposit is needed to purchase an already built home. Stamp duty is also higher as when you build you only pay stamp duty on the land and not the house itself.
It is harder to find an established house with a design that fits your exact needs and it might not be possible to alter or renovate the layout to suit your exact preferences.
Age & Unexpected repairs
As the home has already been lived in, there will be wear and tear on many aspects including flooring, walls, ceilings and roofs. Kitchens and bathrooms may also be out-dated and in need of a facelift, or you may need to undergo major renovations to make the house suit your future needs.
Last but not least, you may run into unexpected costs down the line with ageing electrical work, plumbing, roof or guttering may need replacing or repair work done. These costs can be considerable and may pop-up unexpectedly down the line. If you’re looking at buying an established home, a thorough building inspection should be able to point out some of these money sink holes ahead of time.