When it comes to buying real estate, there is a lot of noise out there that can have an effect on the choice that you make. Should you invest in a brand-new home? Should you buy an old house that sits on a great piece of land and then demolish and rebuild it? Should you redo the kitchen in that old house? Or should you start from scratch and acquire the property on your own? It can be difficult to determine which choice is best for you, which is why we have compiled a list of the benefits and drawbacks of constructing a new area.
Looking for the best home constructions? Look no further! Hitch Property Constructions has the ultimate list of home designs for you to choose from. Here we take a look at the pros and cons of building new.
Building new – Advantages
A blank canvas and new everything
The house's newness is a major advantage. No need to worry about how previous owners treated the place, and no upfront repair or improvement costs. As everything is new, the buyer can expect good quality and proper functioning.
Many potential buyers build because nothing on the market meets their needs or wants. Even if it seems cheaper to buy an existing home, buyers or builders must consider how much they'll need to spend on renovations.
Building a home from scratch means you're involved in every step: finding and buying land, choosing a builder, deciding on storeys, bedrooms, bathrooms...the personalisation options are endless. Because of the variety of homes and features, the construction and building industry is huge. If you have the money, you can build a ten-pin bowling alley at home. Buying an existing home can make it difficult to find the perfect home.
You can design your home from the floor plan to the fixtures and fittings with a blank slate. Newer floor plans are more practical and liveable than older ones.
Don't forget the new-home luxuries and conveniences. To future-proof your home, add home automation.
First Home Owners Grant
Because the First Home Owners Grant is only offered for the purchase of a home that has never been occupied by a previous owner, prospective first-time buyers may find it appealing to purchase a home that has recently been built, either off the plan or otherwise. If you build your own home, your eligibility for the First-Time Homebuyers Grant may or may not be affected, depending on the state or territory in which you make your purchase.
Residents of Australia who are purchasing their first home are eligible for significant financial assistance from the federal government. Under the First Home Owner Grant Scheme, first-time buyers in the state of Washington are eligible to receive a grant in the amount of $10,000 to put towards the purchase of a home that has been recently constructed. Because of advantages such as these, constructing a new house is turning out to be an increasingly appealing option for people in Perth who are interested in climbing the housing ladder.
The higher level of satisfaction
Even if money and features are not a concern, constructing a brand-new home can bring a level of satisfaction that simply cannot be attained by purchasing an already-existing residence. When moving into a new home that you've designed and built yourself, there's a greater sense of pride involved because this is your creation, which matches your style and personality.
No environmental or health worries
In general, newer houses have better energy efficiency because they are constructed with sustainability in mind and using materials that are both environmentally friendly and technologically advanced. If it is constructed with solar panels and has modern insulation, for example, this could go a long way towards lowering the costs of energy consumption in the future.
In a similar vein, the new buyer of the property won't have to worry about the toxins that can be found in older homes, such as lead paint or asbestos, because the new home will have been constructed.
Typically more energy-efficient and environmentally-friendly
Depending on where they live, the average Australian household produces 5 to 10.5 tonnes of glasshouse gas emissions per year.
New homes made from new materials and with new appliances are more energy-efficient, saving you money and the planet over time. The average Australian's top cost-of-living stress in 2016 was electricity bills.
Energy Australia reports that the average Australian household uses 5 MWh annually. To offset one year of a house's electricity emissions, you'd need to plant 25 trees and keep them alive for 30 years.
Modern homes are energy-efficient and environmentally friendly. From the latest housing materials and appliances to the actual design of the house, which can be designed to make the house cooler in the summer and warmer in the winter, you can save on energy and utility bills.
Passive design techniques that take advantage of the sun, tree shade, cooling breezes, insulation, and energy-efficient glazing can make your home cooler in summer (and warmer in winter) without increasing your energy bill.
Personalizing a home means choosing materials, lighting, and cooling. Choosing energy-efficient building materials can save thousands on electricity and gas. Double-glazed windows and doors reduce noise and heat penetration by up to 40% compared to standard glass. Installing solar may be expensive upfront, but it can reduce energy costs.
No need for renovations
When you build something from scratch, there is no need to renovate, which is a time-consuming and potentially expensive process because it is easy to go over time and financial constraints. Building new also gives you the ability to customise everything to your requirements from the very beginning, which means you won't have to go through the anxiety that comes along with the unknown that comes with undergoing renovations.
At HP Constructions, we have the best home constructions selection to make your house a dream come true.
Positives for investment
In terms of the potential return on investment, it can go either way. If an owner purchases a new property, they will be eligible for all of the available depreciation deductions, and they may be able to attract higher-quality tenants who are willing to pay a higher rent in exchange for the luxuries that are more commonly found in newer homes.
The money and time savers
New home builders have access to a number of incentives, including the first homeowners' grant (which applies to new builds only in most Australian states), a new home warranty, and reduced stamp duty, as the tax will only apply to the land if there is no property on it when purchased.
Off-plan purchases can sometimes save money.
Building a new home can be a long process, but owners don't have to wait for current owners or tenants to leave.
Moving into a new house often requires costly renovations. The right renovations can add value to your home if you ever decide to sell. If you build well, your home could be worth more than you paid when you're done - instant equity!
As far as building costs are concerned, you have more flexibility with the final price as you can add and reduce square metres based on your budget. The average cost of building a new home (excluding land) costs around $286,843, reported the HIA. This means (according to Canstar) that it’s cheaper to build in many of Australia’s biggest cities, including:
It is not the case that the First Home Owners Grant is only a possibility for people who already have well-established homes; rather, it is also open to people who are buying their very first homes. Depending on where you currently call home, this could represent a savings of thousands of dollars.
Time it right, and it might be cheaper
In order to satisfy their financial obligations and start construction, developers typically have a predetermined number of properties that must be sold off the plan. This indicates that if you get in early during the first stage of sales, there is a possibility that you will be able to find lower prices on offer. Buying off the plan comes with a number of risks, all of which you need to be aware of before you make any decisions regarding the matter.
You only pay stamp duty on the land when you build
When building a home from scratch, only the land is taxed. This also applies if you move into a brand-new home.
Other extras you pay for when you build include fences, driveways, and a garden.
Stamp duty can cost tens of thousands of dollars. First-time buyers may qualify for a concession, but most people aren't. Building a home means paying stamp duty on lots, not the property. As an example, consider Sydney.
Sydney's median $459,000 land lot requires $16,000 in stamp duty. Buying a $889,000 established property in Sydney costs $35,000 in stamp duty, more than double what you'd pay if you built.
Building new – Disadvantages
A drawn-out process
A common complaint is the time it takes to build a new home, which can be extended by hold-ups, mistakes, or tradespeople's clashing schedules.
Building takes time, and bad weather delays are inevitable. AHURI says it takes 7.5 months on average to build a new home from scratch. Since 2000, it's taken nearly twice as long to build a house because designs are larger and more complex.
Many home loan lenders require borrowers to have the house completed or started by settlement. If a borrower can't meet deadlines, they should contact their lender. Completed in 6 to 24 months.
Downsides for investment
Lastly, buyers and investors should consider investment drawbacks. If it's not centrally located, the value could drop.
New builds may not have as much growth potential. In an older or established home, updating and renovating can generate significant capital growth. In a new development where all buildings are of the same standard, this gain can be difficult to create.
Factors out of your control
The weather is a capricious creature, and it is not something that humans can exert any influence over (yet). If it rains continuously at your construction site for three weeks, then construction will be halted. This will extend the amount of time it takes to build your home, which will ultimately cost you more money. There is also the possibility that delays will occur as a result of poor quality, failed equipment, a lack of available labour, or approvals from the local council.
Less character and space
Another disadvantage that frequently occurs with newly constructed homes is that they frequently have a "cookie cutter" appearance and lack the personality and uniqueness of older homes. If it is important to you to have established gardens and landscaping on your property, you won't have that option if you build a new home. If you buy an existing home, you will have those features.
While new homes may be continually getting better in terms of their floor plans and overall design, the amount of land on which they are built is getting smaller. Because of the ever-increasing cost of land, most recently constructed homes are situated on significantly narrower lots than their predecessors were. This, in turn, generally results in rooms and backyards that are on the smaller side.
The location of the development can also be problematic, as a lot of new developments are typically situated on the periphery of cities rather than in central locations. In addition, if it is in a newly developed suburb, it is possible that there will not be any well-established facilities or even a community for a good number of years to come.
The noise that comes from ongoing construction may be something that owners of newly built estates have to put up with for many years to come.
Land is extremely expensive to purchase in the majority of Australia's capital cities. Even if the cost of actually building the house is not going to be all that high, it is still important to choose the location of the land you buy very carefully.
The hidden costs and uncertainty
Those who are building new properties frequently discover that there are hidden costs that they may not have accounted for, despite the fact that there may be some cost savings. This may be due to the cost of the site, the landscaping, or the payment for extras that are not included on the builder's list of standard inclusions.
In addition, there is no certainty, which can add stress and an element of risk to the process of constructing a new home. Because there is no physical property to inspect, the buyer is required to put all of their faith in the property plans and builder. Furthermore, the buyer might not know exactly what they are getting until the construction is finished.
Progress fees on construction loans
Construction loans typically require you to make payments in stages as the building is being constructed; therefore, before agreeing to the terms of any loan, it is important to investigate the fee structure and payment schedule. When you make a payment, some lenders will charge you a fee to process it, while other lenders will only charge you a one-time fee.
The cost is not fixed
If you do not carefully monitor what is being spent and where it is being spent, construction costs may quickly get out of hand and become unmanageable. When working with certain builders, the fee may not include everything that you believed it would; for example, driveways or light fittings may be charged at an additional cost. Make sure that the contract you have with your builder includes everything that you require.
When purchasing a home that is still in the planning stages, prospective buyers should be very cautious and ask a lot of questions about the model home that is being shown to them. You do not want to find out that the more expensive tiles and light fittings that are being used in the display are not included as standard, but rather cheaper alternatives that are not as good as the ones being used in the display.
Check out our extensive range of home designs at Hitch Constructions.
Any modifications to the plan made mid-way are likewise usually expensive. Changes made midway through construction can incur additional costs such as:
- Drafting fees from the architect, builder, or engineer
- Penalty fees from the builder
- Legal fees for altering the contract
- Extra materials
- Extra labour
You can’t usually move in right away
Borrowers have a responsibility to consider how much it will cost them to live elsewhere during the construction of their home. Even if you are able to move in immediately while the building is being constructed, you can rest assured that you will be surrounded by the chaos of construction until it is finally finished. Home builders may discover, after moving into a new development, that even if their own home is finished ahead of schedule but the other homes in the neighbourhood are not yet finished, they should be prepared for ongoing construction noise and dust in the air.
Putting up a new house can feel like a Herculean effort, particularly if this is your first time doing so. However, there are some very real benefits that come with constructing a new house as opposed to purchasing an existing one. When you realise that you don't have to buy a house and can instead build one, a new chapter in your life officially begins.
FAQs About Home Construction
A home can do many things for a family but most importantly it can help bring a family close together. The process of building a home is a great opportunity to enhance new techniques and advance your communication. Home construction might not be an easy task but it can definitely make a huge impact in lives.
Less maintenance, more energy efficiency, and fewer renovations mean lower cost in the long run. A new home may cost more than a resale home upfront, but after years of homeownership, you'll find that the investment paid off. This is particularly true if you take steps to futureproof your new home.
Overall, new-build properties are more expensive. Their prices are relatively high, contributing to lower rental yields and potentially diminished capital growth for landlords and investors. However, whilst the financial cost is the most glaring downside when purchasing new-build properties, it is not the only one.
A custom-built home lets you personalize your dream home right down to its foundations, but building a new home is not always cheaper than buying an existing home. If you'd like to take control and spell out every single detail about your future home, then building allows you to do so, but with added costs.
The question of how long a property should last is often debated in the construction industry. In 1992, it was suggested that new build properties should have at least a 60-year lifespan. However, just 25 years on, the Local Government Association (LGA) has stated that new-build homes should last at least 2,000 years.