Many west Australian have the great task of deciding, “Do I buy Established or Build new”?
The pros and cons of buying Established or Building a New Home?
When buying property you must consider all options. Often building a new home is overlooked because it is considered too long and too hard to facilitate or because the client wants a quick solution. In my opinion, too many property buyers overlook Building their own home because they get caught up in a whirlpool of emotion for an instant fix. If they were to look at their best long-term options I believe building would meet their best financial, emotional and physical requirements far-far better.
If you where to look where the mass of the market goes, it typically leans well towards buying an established property! But, if you were to look at where the most profit is made it tends to be from buyers who build their own home or develop a property. A new home next to an established older home will always fair better for resale. Not only will it typically sell for more but it sells faster. From what I have seen, a new home is a form of insurance. My experience has shown me, new homes (in comparison to old) maintain the “New home Feeling” for at least the first 12 years and hence better resale value. I tell a lot of my clients if you want to yield the best return from a new rental property or your newly built home, sell it within 12 years and build again.
The other option is to take the middle ground. Buy cheap and commit to a renovation. While a renovation can be rewarding also, you are now living in a building site environment which is probably not great if you have a small family. The rule of thumb for renovation costs is typically 3 to 5 times the price in comparison to normal (clean block) construction costs.
There is no doubting there are times in the property cycle where established is cheaper than building. If you are lucky enough to purchase at this time you can pick up a 3 to 5-year-old home cheaper than what a builder could copy it for. This really though only applies in newer estates and at certain times in the economic clock cycle. A new home in a blue chip suburb, however, will always set the pace for top end resale. Building in an older area will require a demolish and build program, but the rewards and satisfaction are huge.
Established does in some cases offer closer and better suburbs to CBDs or amenities, but building in these same established suburbs will set a higher standard of resale and easier living. Once the dust has settled, you are either left with a new home or someone else’s older home. The home you select will decide how you live on a day to day basis. You take on the maintenance or a more uncomplicated lifestyle. If you have a choice, I would always select a New Home that offers easier more functional living.
What is easier living?
Energy efficient home design – requires less heating and cooling. There is more natural light in the areas that matter. Windows, doors, and insulation have all improved in quality and efficiency with a new home
Less maintenance- every new home comes with a builders minimum 7-year warranty. Appliances come with manufacturer warranties. The homes gardens and paved areas are mapped out to be water-wise. 80% of problems with homes today typically are water related. A new home uses the latest in plumbing fixtures such as modern Polybutylene piping, instantaneous hot water systems (which are about 70% more efficient than storage) and flick mixer taps that won't water hammer, leak and will never need a washer. The paint used today is far superior to what was used 30 years ago. An older established home would typically not have any of these attributes.
Room dimensions are customised – this allows you to zero in on exact required room dimensions plus the ability to create a modern home design. A 20-year-old home typically had a dining room and lounge room. There was no requirement to have a North facing outdoor area. Today’s modern home designs have theatres, extra space in the garage, an alfresco with an outdoor kitchen, double sized showers etc proving times have changed in modern house design.
Acoustics – today's modern homes are better acoustically at keeping outside noise out. Older homes were not required to do this. This may not sound like a major advantage until you realise how important your sleep is? With the requirement to make homes thermally more efficient, window frames, doors, and their seals have all improved.
Modern Products – while I will not argue there is anything better than a home with an established garden, today's new homes are full of the latest gadgets, Ethernet cabling, LED lighting, modern and efficient air-conditioning, you could even upgrade your new home to 3 phase power for around $600. With an established home, it could cost thousands… Automatic reticulation, selection of local plants, artificial turf can make the live-ability and maintenance plus your time, easier.
Less Stamp duty –When you buy an established home you pay Stamp duty on the established sale price. When you Build you only pay Stamp-duty on the land. The construction component is Stamp duty-free.
What is amazing is that 90% of the public buy established, and only around 10% of the public build a new home.
Conclusion – If you are after a quick fix, buying an established home is fast and reasonably painless. Apart from the extra stamp duty you’ll typically be able to move in at the 6 week mark. With established the rule is - what you see is what you get. There is no-one to call and complain about the dripping tap or the crack in the wall. There are plenty of good articles on established checklists to refer too in the buying process.
If you want a new modern home design with all the thrills in the same suburb, the only option is a demolish and build. This does allow you to make cheeky offers on “bowl over” style older homes that are beyond renovation. You are however at least 6 to even 18 months away from moving in, so additional rental costs etc need to be considered. If you go down this path you are choosing the path that most people do not follow but the experience and long-term gains are remembered forever.
