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Buy established property or build from scratch?

February 8, 2023 | IN AVIDConnect | BY AVID | 6 min read

Land is highly sought after in Australia’s most popular cities and regions, but that doesn’t mean you can’t find your ideal home in a suburb that matches your lifestyle. The only question is: for your first home, should you buy an established property or build from scratch?

Each choice comes with its own pros and cons, and it’s important to do your research before making a decision. To help get you started, we’ve outlined some things for consideration.

ESTABLISHED PROPERTY

Advantage ✓: You can do a physical walkthrough

With an established home, you know exactly what you’re getting. Not only can you review all the specifications and look at professional images of the property online, but you can do a physical inspection to ensure it’s right for you. A walkthrough will also give you a better idea of the space, what changes you’d like to make, and how the suburbs suit your needs (such as proximity to neighbours, what schools and cafes are close by, and how far you need to walk for public transport).

Advantage ✓: You could be closer to the CBD

Vacant land is mostly available in the outer suburbs of big cities, which often means if you want to build, you may have to consider living further from the CBD. Of course, when buying an established property, the main challenge to finding a home in your preferred suburb could be budget. This could compromise the size or type of the home available to you.

Drawback ✗: The design of the home is fixed when you buy!

Everyone dreams of their perfect home – the one with all the bells and whistles customised to their heart’s desire. But with an established home that’s not possible, well at least not immediately when you purchase. Any designs on renovations will come at an additional cost, and may need to be something that is delayed based on your personal financial situation.

BUILDING FROM SCRATCH

If you want a home that matches your dream, then building a new home is the way to go.

Advantage ✓: No stamp duty on the home itself

In addition to the First Home Owner Grant for first-time buyers, those who choose to build from scratch can enjoy lower fees on things like stamp duty. This is because you only pay stamp duty on the land and not the house itself, saving you thousands.

Depending on the value of your vacant land, you may also be able to take advantage of concessions, including Queensland’s First home vacant land concession, the First home buyer duty concession for residents in Victoria or the First Home Buyer Assistance Scheme available for first time buyers in New South Wales, saving on stamp duty and giving you more money to spend on building your new home.

Advantage ✓: Energy efficient and environmentally friendly

It depends on your builder and building designs, but for the most part, building a home is better for the environment. As they are built with modern materials and have new appliances installed, which are often more efficient than dated fixtures in some established homes, newly built properties tend to use less energy. You can even go one step further and integrate passive design into your build – which harnesses natural resources like the sun and wind to be more environmentally friendly.

Advantage ✓: Lower Ongoing Maintenance Costs

Another advantage of building a new home is the lower cost of ongoing maintenance. Older properties often have hidden plumbing, electrical or structural issues that may not be picked up on the initial Building and Pest Reports.

Building a new home means that you are covered by Home Warranty Insurance. The cover lasts up to 6 years from completion of the domestic building work or termination of the domestic building contract (6 years for structural defects and 2 years for non-structural).

Drawback ✗: You may not be able to live in it immediately

Depending on whether the house has just been built or not, you may have to wait several weeks or even months (especially if it still needs to be designed before construction can begin) to move in. This isn’t necessarily a bad thing, as even with buying an established property, you typically have to wait a set period before settlement.

What’s more, this period brings the added bonus of more time to save extra money before settlement.

Drawback ✗: Costs aren’t always fixed

Again, this depends on your builder and how your design decisions factor into construction, but sometimes the cost of building a home won’t include some of the things you expected (such as light fittings, driveways and fences). Expenses can also add up if you decide to make modifications midway through construction. In all things, it’s important to understand how to choose a good builder and ask them lots of questions to ensure you get exactly what you want.

A great way to reduce the likelihood of unexpected costs is through a fixed-price contract, where everything that’s included is set out from the start.

Whether it’s the desirable and relaxed lifestyle of Harmony on the Sunshine Coast, the stylish and spacious surrounds of Waterford at Chisholm, the tranquil sanctuary of Covella located in Greenbank, or the connected community at Carolina in Deanside – you will find a land or house and land package that suits your needs.

Disclaimer

The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Although every effort has been made to verify the accuracy of the information contained in this website, AVID, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained on this website or any loss or damage suffered by any person directly or indirectly through relying on this information. AVID recommends you consider whether it is appropriate for you and that you seek your own independent advice before acting on this information or making any commitment of a legal or financial nature.Buyers may be eligible to participate in the Australian Government’s Regional First Home Buyer Guarantee or state government’s First Home Owner Grant. Not an AVID promotion. Eligibility and date restrictions apply. AVID does not accept any liability with regard to these schemes. See http://firsthome.gov.au and https://www.nhfic.gov.au/ for more information and full terms and conditions.

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