We’ve broken down the golden comparison for home buyers – experienced and new – to make life easier for everyone!
It’s one of the timeless questions in real estate – should I build my own home or buy an already established house? Which option is cheaper? Which option will make me happier? It’s a topic that involves a lot to consider however will ultimately come down to the priorities of the buyer. Below are what we believe to be the main pros and cons of each method.
• Can be built to exactly how you like it (reality permitting): when building from scratch you have the advantage of starting with a blank slate, so you get to include your own preferences for all the decorative features.
• Buyer incentives such as the First Home Owners Grant: the FHOG is eligible for those who have never owned their own home before, are building a new home (or buying one less than 5 years old), and the value is up to $750,000. The FHOG is worth $10,000 in metro areas across Melbourne, and $20,000 in regional Victoria.
• New appliances and fixtures means warranty and efficiency: building new may provide lower ongoing costs in terms of maintenance and energy due to the fact that they come equipped with Home Insurance Warranty for any issues that may arise, and the new, high-end appliances that are fitted throughout are generally more energy efficient than what would be found in an established home.
• Costs may not be fixed: if you aren’t carefully monitoring expenses, it is easy for costs to spiral out of control. Ensure that you check your builder’s contract thoroughly and are certain it incorporates all the inclusions you need. Be particularly vigilant when buying off the plan to ensure all the beautiful fittings and displays you love are included as standard. Additionally, modifications made mid-build will usually incur extra costs so be sure to consider that.
• Can’t move in straight away: upon deciding to build, you need to purchase land which may take one to two years to title, and then you need to allow time for construction which can be easily delayed. This could potentially mean that you need to find somewhere else to live and maybe pay rent.
• Increasing land competition: blocks of land are becoming a premium asset which is reflecting in their premium price tags. Even if your house is not terribly expensive, depending on the area you are choosing to build in, the price of the land could bulk up the overall cost. Despite the increasing value in land, the dimensions are smaller than what they used to be so if you envision yourself in a sprawling garden, building a new home may not be the best option for you.
• Established homes, established neighbourhoods: existing homes are usually situated in neighbourhoods that are well established, meaning schools, shopping centres, supermarkets, parks, public transport, etc., are already there and close by. The location of these established neighbourhoods also tend to be closer towards the city as new estates are getting built on the outskirts, so if inner suburbs are your thing this could be for you.
• Usually a faster process: once you have officially hunted down your desired home, the only steps left are to pay the deposit and then wait for settlement to move in, which can be in as little as 30 days. This applies for both private sale and auctions.
• Character and personality: established homes are said to have character through their uniqueness in design and personality such as period homes, use of weatherboards, carter cottages, etc., as opposed to what can be described as the “cookie cutter” feel in new estates. In addition to the house having personality, the garden and landscape is also likely to be established, with mature trees and pathways already made.
• Better investment potential: if buyers know they want to upgrade, buying an established home can increase its value with the right makeover, providing a profitable return when selling which allows you to get closer to your dream home.
• May be more expensive: an established home, either decades old like a period style home, or just a few years old in a relatively new area, is likely to need money spent on it. It could be due to regular maintenance or extensive repairs so it’s important to look at the home survey and ensure that all major items and systems are in working order. Moreover, the location of established homes can impact the buying price, making it more expensive due to the highly sought after areas.
The decision to build or buy can be a difficult one, leaving you torn as each type of property comes with its own set of benefits. Essentially, it will depend on your own circumstances around budget and priorities; basically what you think are important features in a property. Think about your long term plans, financial situation, and job security before you make a decision, and carefully consider all your options.