Which real estate option makes the most sense – buy an existing property or build a new one? This is one of the most common questions asked by new home buyers.
Answering the question isn’t easy, but we’re going to try!
One important note – Balance Design and Construction is based in Coffs Harbour, New South Wales, so our calculations are based on property in our area and the rules and regulations that apply in NSW. Other states have different stamp duty and first home buyer arrangements.
Purchasing an existing property is definitely a more streamlined process, with fewer up front costs. Find a property you love, negotiate a great deal, and that’s about it. Your costs are the purchase price, stamp duty, and conveyancing fees.
Building a new property is a little more involved. First, you need to purchase your block of land and pay stamp duty and conveyancing fees. Then, you sign a contract with your chosen builder, and pay for the construction of your new home in instalments. You may pay some finishing costs, such as fencing and landscaping. During the build, you will also have holding costs – interest on your loan and possibly rent during construction.
We’ve crunched the numbers for you, and the results are interesting. There isn’t really a big financial difference between buying an existing property and building a similar sized new home.
If you’re a first home buyer, the calculations change a little. Under the current rules in NSW, first home buyers are exempt from paying stamp duty, and may receive a grant of $10,000 for new homes. Curiously, this arrangement actually makes existing homes relatively more affordable, even though the NSW Government’s aim is to stimulate new construction activity.
(Every property, family, and local property market is unique, so you should do your own calculations to determine which option is right for your specific circumstances. This is only one specific example, but we’ve tried to compare apples with apples to provide a genuine example of the differences in cost between buying existing and building new)
The upfront costs of purchasing a home are the main thing most purchasers consider, but long term holding costs are important as well.
On an existing property, maintenance requirements are usually more significant. Hot water systems, air conditioners, fans, lights, and appliances all have limited service lives, and will require maintenance or replacement eventually. Walls, particularly external walls, will need repainting, and decks and other exposed timber will need to be refinished.
Existing properties also come with uncertainty. Even with thorough pre-purchase building and pest inspections, it is possible to miss a significant problem.
On the other hand, new homes include all new fittings and appliances, which should not need anything other than routine maintenance for many years. The home will have been independently inspected multiple times through the build process.
A new home in NSW also comes with a warranty, which is backed by mandatory Homeowners Warranty Insurance. If there is a problem with your new home, just call the builder and have them come back to fix it!
Every existing home is different, so it’s impossible to put an exact price tag on these longer term costs. Some existing homes will be low maintenance, while some will require extensive maintenance and upgrades. If you discover that you need to replace your roof or have asbestos-based cladding removed, your “bargain” existing home could quickly become a financial liability.
The important thing to keep in mind is that the long term costs of owning a home are variable and can be significant.
If you’re still torn between buying an existing property or building a new house, keep in mind that some benefits of building a new home can’t be measured in dollars and cents.
With an existing home, you’re buying someone else’s dream. With a new home, you can choose the finishes, the layout, and the colours.
How do you put a price on designing a home that fits your family like a glove? How do you put a price on the feeling you get when you walk in the door of your new home?
We understand that every existing house, and every block of land is unique. If you’re still unsure about the best option for your family, give us a call on 1300 056 298! Our friendly team will talk you through the costs and advantages of building a new home, and you can make an informed choice.
The team at Balance provides expert assistance at every stage of the residential construction process, from initial feasibility analyses to final touch-ups. Our in-house design team has produced a portfolio of exceptional new home designs, and we also offer custom design services using state-of-the-art design software (including 3D renderings you can view on your smartphone or VR glasses!).
We have solutions for steep sites, beachfront lots, and unusually-shaped blocks. We take care of Council paperwork and approvals, and provide professional interior design advice to ensure your home is stylish and practical.
Seeking a construction partner for your next investment project? Balance are the Coffs Coast experts in townhouse and boutique developments, with multiple successful projects delivered over recent years, producing excellent returns for our clients.
We offer a unique service to investors, with our ability to handle every stage of your development, from early concept plans through to completion. We provide excellent value, and can even put you in touch with quality local real estate agents to help sell or rent your new development.
We also offer turnkey development solutions so investors can start earning a return sooner with less hassle.
Unfortunately, the big builders have convinced new home buyers that the only way to afford a new home is to settle for one of their standard plans or pre-arranged house and land packages. But why settle for a home designed for someone else?
A home designed to meet your specific needs may be much more affordable than you realise! At Balance, our pricing is transparent and we’ll happily tailor our designs to meet your budget and the family’s needs.
You’ve got nothing to lose – visit our display home, or give us a call today on 1300 056 298 to arrange a free consultation.