Build a New Home or Buy an Existing Home?
A common crossroad for most new home buyers is whether to buy a pre-owned (or second hand) home or build a brand new home from the ground up. The opportunity to build a new home may not be for everyone, but there are many, many benefits that new home buyers shouldn’t ignore.
Pros & Cons of Buying Second Hand
The first question you’ll need to ask yourself is all about location…. location… location! Buying a second hand home usually offers more choices in established areas that are usually located closer to city centres. You also have the added benefit of a quicker purchase transaction and ‘what you see is what you get.’
However, the downside to buying second hand can prove costly in the long run. When buying pre-owned, you’ll likely have little or no information about the home, other than what you can see. Have there been any historical maintenance issues? Are there any maintenance issues that are have not been detected or are yet to surface? Was the house built by a reputable builder who followed good building practices? What materials were used to build the home? Are there any warranties relating to the house? All very important questions.
When buying a second hand home, you’ll pay stamp duty on the entire purchase price. For example, if you were buying a home for $700,000, you’d be up for a stamp duty bill of almost $27,000! In contrast, if you were to buy vacant land and build a new home, you save on stamp duty because it’s calculated on the land value only (and not the building cost). This could mean you would save up to half of your stamp duty costs!
Pros & Cons of Building a New Home
When building new, the biggest compromise would usually be location. Vacant land is mostly available in newly developed areas that are positioned in urban growth centres, such as the Sydney’s South Western suburbs (Austral, Leppington, Gregory Hills & Oran Park) and North Western suburbs (such as Marsden Park and Box Hill.)
Building a new home does take time, although less time than people often think. At Ashmont, on average, we start site works within 4-6 weeks from you purchasing your block of land, meaning you could be moving in within 6 months. Considering how long you’ll own this home, it’s really not that long a wait.
If you can see yourself living in any of the growth centre locations and are happy to wait for your home to be built, then the benefits of building new, far outweigh the negative:
- A potentially lower total investment cost after taking into account government incentives and grants that you may be eligible for:
- $25,000 Home Builder Grant
- $10K First Home Owners Grant
- First Home Buyers Stamp Duty Exemptions / Concessions
- First Home Loan Deposit Scheme
- First Home Super Saver Scheme
- Stamp Duty savings since this duty is calculated based on land value only
- Creative Control – you can choose everything, from the floor plan to the finishes of your new home
- New homes are more energy efficient and will cost you less to run in the long term
- Know your builder – you get to select the builder of your choice, ensuring they meet all of your requirements
- Less maintenance and better warranty life
- If building for investment, you can take advantage of better capital depreciation with a new home, as you can claim deductions over the maximum life of the property
- And lastly (and arguably most importantly)…. Everything is brand new!!!
A lot to consider.
If you’d like any further information on how to get started building your new home, please connect with us via phone, email or our social pages.
Happy Home Hunting!
The Ashmont Homes Team