Today’s property market is tough, especially for first time buyers looking to get a leg onto the housing ladder, as housing prices in inner cities continue to rise. So what is the better decision, to build a new house or to buy an already established home? It is often said that buying a second hand car is inheriting someone else’s problems. Is the same true for property? We look at the influencing factors for each option.
Depending on whether you build or buy, there may be different grants available to you. Building can reduce the cost of stamp duty if you buy a vacant block of land as the price will be determined by the land and footings cost and not the total house and land cost. For buying a property you can use the stamp duty calculator to work out the stamp duty, which depends where you live.
Consider property location
This can be the deciding factor in the build vs. buy dilemma, because if you want to live in the inner city your choices may be limited to buying an established property, whereas in outer lying suburbs more vacant blocks become available. One of the most important factors to consider when choosing the location of your house is the travel time required to get to work from where you build. Depending on where you work, the outer suburbs may not be too far to commute, but if you work right in the city, you may need to live within a closer radius. Established houses not only tend to be in areas with more culture than newly built areas, they are also likely to be located close to transport links, schools, shopping centres and amenities like gyms.
Time required to build a house
It can take a greater amount of time to build a house than to buy an already established property. The time it takes to build a house may also include getting design plans, obtaining council approvals and even the weather may cause delays in available building hours. You may also need to factor in considerations about financial repayments as well as living arrangements while your new house is being built.
Customise your home
If you are building a house, you can design a property any way that works within your budget, allowing you to put some of your own style into your home. This customisation does require a lot more time to make decisions about the design and so this is a bigger commitment and requires more energy than just buying a house already built.
Purchasing an old home can require more ongoing maintenance than a new house, as there will be older parts which may require repainting repairs and replacement from wear and tear of previous owners. New homes can come with a warranty that may cover repairs or remediation from defective building in the first few years of ownership (depending on your warranty).
Energy efficient homes
There has been significant development in energy efficient design, which when building a new home can be incorporated, keeping energy and electricity bills down, saving you money. For instance you could install solar power panels or rain water tank to reduce power and water bills. Older properties may have old appliances which can use more power than modern energy efficient technologies. Check out the government’s site on Living Green and find out about the savings you can make on power bills from energy efficient technology.
Deciding whether to build or buy a house is a huge decision and possibly one of the biggest you will make in life. If you’re thinking of going to an auction, read our Buyer’s Guide to Auctions or if you are just starting to think about buying a house see our checklist for buying a home in Australia. Also if you need to sell a property here are five tips to sell your home faster.