In the market for a new home? In this article we’ll compare the pros and cons of building a new home vs buying an existing one. For property investors, there are a different set of pros and cons to consider, but for this article we’re focusing on those who are buying or building a home as their primary residence.
New build properties: The advantages
Many people love building their new home from scratch, and there are plenty of reasons why.
Your own design
Perhaps the biggest factor in favour of building a new home is the opportunity to design it according to your needs. You can plan ahead, build for a growing family or build only what you need if you’re downsizing. When most people think about their dream home, it’s something that caters perfectly to their lifestyle – not an existing home that was built for somebody else.
The other major contributing factor is the relatively low-risk of maintenance expenses. When you work with reputable builders, your new home should be problem-free for a long time. New wiring, plumbing, the bathroom and kitchen you always wanted – this means less renovating in the early years of home ownership.
From a financial viewpoint, this is a huge advantage, because you can put more money into paying off your mortgage, rather than repairs and renovations.
There are usually more government incentives available for new home builders. This may change from time to time, so it’s always worth checking up on all of the incentives available in your area before making a decision.
Build in new areas
Most new homes are built in new areas, meaning the whole neighbourhood is full of nice, new homes. It’s a more idyllic way of life, and you have the ability to get into developing areas on the ground floor. As land prices rise over time, you’ll be the beneficiary.
New build properties: The disadvantages
There are some risks associated with building your new home too, so it’s worth being aware of these before you make the leap.
Chance of going over your budget
When building your own home, costs can blow out pretty quickly if you don’t budget properly. This is why you should always ask your builder for a fixed price. You don’t want any surprises. Even with a fixed price building contract, you need to factor in all other expenses such as soil testing, access to services, insurance, government fees, legal costs and more.
Potential market risk
If there’s a downturn in the market, new homes can sometimes be hit the hardest. Homes in established areas may only see their value fluctuate slightly, whereas new sub-divisions often experience more drastic shifts.
Existing homes: The advantages
So, how about choosing a ready-made existing home rather than a new build? This certainly has some advantages too.
Add value quickly
If you’re a handy type, you can pretty quickly add value to an existing home through renovations and repairs. If you’re not, this can be costly. However, the potential for value-adding is certainly there, whereas a new property is already in its best condition and not a lot can be done instantly to improve it.
Established locations near services
Existing homes are usually in established suburbs with shops, schools, public transport and other services. For those who are less mobile, this could be appealing.
Possible higher land value
Land value tends to increase over time, so if you buy an existing home, the land is potentially worth more than the home. For example, land in a well-regarded suburb may be worth a lot more simply because of the location. However, this is generally factored into the purchase price, so you’ll pay for this privilege.
Existing homes: The disadvantages
Let’s consider some of the risks associated with buying an existing home.
Repairs. One word says it all. You can do your due diligence with building inspections, but you never really know what problems might be lurking in an existing home until you get in there. Will it need rewiring? Reroofing? Are there plumbing issues that aren’t easily identifiable before you buy? All of these problems can start to add up, and it’s even harder to find money for them when you’re paying off a mortgage.
Not designed for you
An existing home isn’t designed for you, so you’ll need to compromise a bit on your wants and needs. It’s certainly possible to fall in love with an existing home, but it will never be the perfect fit you could have by designing it yourself.
Possible lower resale
This is more speculative, but as all of the homes in a suburb begin to age, this can affect the value of all homes in the area. If your suburb should become less desirable, you may find it harder to sell your home for a decent price.
Ultimately, if you can afford it, building a new home is always going to be more attractive. Everything is brand-new, it’s designed to suit your lifestyle and maintenance costs should be low. With that in mind, some people just love the idea of buying an old house and fixing it up. So, it really depends on where you’re at in life and what your goals are. For comfort and lifestyle, though, you can’t beat building a new home.
With this in mind, if you love where you live but yearn for a home that’s more catered to you, perhaps a knockdown rebuild is right for you? That way you can get all the benefits of a new home while staying in a location you love.