It’s one of the oldest – but never ending – debates when buying property: Is it better to buy old or build new?
There are positives and negatives to each approach and there is no definite answer.
Here we take a look at the pros and cons of building new.
Building new – advantages
A blank canvas and new everything
One of the most obvious advantages is that everything about the house is new. You don’t need to worry about how previous owners treated the place and it won’t require any upfront repair or improvement costs. As everything is new, the buyer has the assurance that everything should be of a good quality and in perfect working order.
There’s also the major drawcard of having a blank slate – you can create your home exactly how you want it to your own specifications, from the floor plan to the fixtures and fittings. Speaking of floor plans, those in newer homes are often more practical and liveable than those in older homes.
And don’t forget the luxuries and modern conveniences more commonly found in new homes. You could even incorporate elements of home automation if you wish to set your home up for the future.
No environmental or health worries
Newer homes are generally more energy efficient, built with sustainability in mind and with environmentally friendly, sophisticated materials. This could go some way in reducing energy costs down the line, if it is built with solar panels or has modern insulation, for example.
Similarly, by building new the buyer won’t have to worry about the toxins that can be found in older properties such as lead paint or asbestos.
The money and time savers
New home builders have access to a number of incentives, including the first home owners’ grant (which applies to new builds only in most Australian states), the security of new home warranty and reduced stamp duty, as the tax will apply to the land only if there is no property on it when purchased.
There are also cost savings to be made in some circumstances if the owner wishes to purchase a property off the plan.
And while building a new home can be a long process, a positive for owners is that they don’t have to wait for current owners or tenants to move out before they can move in.
Positives for investment
In terms of investment potential, it goes both ways. A new property will give owners access to the full depreciation deductions available and may attract a higher quality of tenant, who will pay more for the luxury touches more common in newer homes.
For all the positives for building new, there are several downsides buyers must also consider and weigh up.
A drawn out process
A common complaint is the time it takes to build a new home, with the original lengthy timeframe often stretched out even more if there are any hold ups, mistakes or clashing schedules with various tradespeople.
Location can also prove an issue – a lot of new developments are often on the outskirts of cities and not in central locations. Furthermore, if it is in a new suburb there may not be established facilities – or even a community- for several years to come.
In new estates, owners may also have to put up with noise from ongoing construction work for years to come.
Less character and space
Another common downside is that some new builds can be a bit “cookie cutter” and lack the character and originality of an older build. Furthermore when you build new, you won’t have the established gardens and landscaping you’ll find in an established property, if that’s something that is important to you.
While the floor plan and design of new homes may be constantly improving, the size of the land they are on is decreasing. New houses are typically now built on smaller lots than they used to be, due to rising land prices. This in turn generally means smaller rooms and backyards.
The hidden costs and uncertainty
And while there may be cost savings, those building new properties often find there are hidden costs which they may not have accounted for. This could be associated site costs, landscaping or paying for extras that are not in their builder’s list of standard inclusions.
There’s also a lack of certainly which can add stress and an element of risk to a new home build. As there is no property to physically inspect, the buyer must place all their trust in the property plans and builder and they may not know exactly what they’re getting until it is complete.
Finally, in terms of investment potential, there can be some significant drawbacks buyers and investors should consider. If it’s not in a central location, this could lower the value of the property.
Furthermore there mightn’t be as good potential for capital growth in a new build. In an older or established home, you can often generate more capital growth by making a few updates and renovations, which can give owners notable returns. In a new development however, where all other buildings are of a similar standard and no updates are required, this gain can be hard to create.
There are pros and cons to each approach and buyers should carefully weigh up both options when deciding what the best choice is for them.