Home Construction Tips

What are the benefits of building a house?

When it comes to purchasing property, there’s a lot of noise out there that can influence your decision. Should you buy a new property? Should you buy an old property on great land and knock it down then rebuild? Should you renovate an old property? Or should you start fresh and buy the land yourself? It’s hard to know which is the best option for you, and we collected the pros and cons of building a fresh 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

Home Construction Tips

A blank canvas and new everything

One of the most obvious advantages is that everything about the house is new. You don’t need to worry about how previous owners treated the place, and it won’t require any upfront repair or improvement costs. As everything is new, the buyer has the assurance that everything should be of good quality and in perfect working order.

A large number of potential buyers end up building instead because they do not find anything currently on the market that suits what they want or need. Even if it looks like it may be cheaper to buy an existing property, potential buyers or builders must consider how much money they would need to spend on renovations to make it “just right” for their household.

Building a home from scratch will typically mean you’re involved in each step: finding and buying a lot of lands, choosing your builder, deciding how many storeys there are, bedrooms, bathrooms…the personalisation options are endless. The construction and building industry are partly so massive because of the variety of homes and features available. If you want to build a ten pin bowling alley in your house and have the funds to do so, you can! Finding a house that meets your every need can be far more difficult when simply buying an existing home.

Additionally, choosing higher-quality materials means there’s less chance of your home requiring maintenance down the line, as well as improving the value of your home. In contrast, an established home may have existing maintenance issues prior to your arrival.

There’s also the major drawcard of having a blank slate – you can create your home exactly how you want it to your own specifications, from the floor plan to the fixtures and fittings. Speaking of floor plans, those in newer homes are often more practical and liveable than those in older homes.

And don’t forget the luxuries and modern conveniences more commonly found in new homes. You could even incorporate elements of home automation if you wish to set your home up for the future.

First Home Owners Grant

Buying a freshly-constructed home off the plan or otherwise may appeal to first home buyers because the First Home Owners Grant is available if you buy a home that no one has lived in before. You may or may not still be eligible for the First Home Owners Grant if you build, depending on which state or territory you are buying in.

Government incentives

There are substantial government incentives on offer for first home buyers who live in Australia. In WA, first home buyers are entitled to a $10,000 grant under the First Home Owner Grant Scheme to go towards the purchase of a newly built home. With benefits like this, it’s no wonder building a new home is becoming more and more attractive for the people of Perth who are looking to get themselves onto the property ladder.

The higher level of satisfaction

Money and features aside, building a brand new house can lead to a level of satisfaction that can’t be achieved through buying an existing home. There’s a greater sense of pride moving into a new home you’ve created yourself – this is your creation that matches your style and personality.

No environmental or health worries

Newer homes are generally more energy-efficient, built with sustainability in mind and with environmentally friendly, sophisticated materials. This could go some way in reducing energy costs down the line, if it is built with solar panels or has modern insulation, for example.

Similarly, by building the new buyer won’t have to worry about the toxins that can be found in older properties such as lead paint or asbestos.

Typically more energy-efficient and environmentally-friendly

The average Australian household produces tonnes of greenhouse gas emissions every year – between 5 tonnes (Energy Australia) to 10.5 tonnes per year (Brisbane City Council) depending on where they live.

New homes are made from brand new materials and come fitted out with new appliances, and so they tend to be more energy-efficient, saving you money and saving the planet in the long run. The cost of electricity bills was the average Australian’s number 1 stress when it comes to the cost of living in 2016.

The average Australian household consumes about five-megawatt hours of electricity per year, reported Energy Australia. That means you would have to plant around 25 trees and keep them alive for 30 years to offset just a single year of a house’s electricity emissions.

When you’re building a modern house that means you’re implementing the more energy-efficient (and environmentally friendly) practices. From the latest housing materials and appliances through to the actual design of the house – which can be designed to make the house cooler in the summer and warmer in the winter, aka ‘passive design’ – you can save on energy and utility bills down the road.

Building your house right can make it cooler in summer (and warmer in winter) without spending more on your energy bill “passive design” techniques that take advantage of the sun, shade from trees, cooling breezes, insulation, and energy-efficient glazing.

Part of the personalisation aspect of building a home means you can choose the materials, lighting, and cooling used throughout the home. Choosing energy-efficient options when building your home can save you thousands on electricity and gas costs. High-quality materials like double glazed windows and doors will block out noise and reduce heat penetration by up to 40% compared to standard glass. While installing solar may be expensive upfront, it could help you save on energy bills in the long run.

No need for renovations

When you build new, there’s no need to renovate, which can be an exhausting and expensive process as one can easily blow out time frames and budgets. Building new also allows you to tailor everything to your needs from the outset, so you won’t have to experience the fear of the unknown that’s associated with undertaking 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 investment potential, it goes both ways. A new property will give owners access to the full depreciation deductions available and may attract a higher quality of tenant, who will pay more for the luxury touches more common 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), the security of new home warranty and reduced stamp duty, as the tax will apply to the land, only if there is no property on it when purchased.

There are also cost savings to be made in some circumstances if the owner wishes to purchase a property off the plan.

And while building a new home can be a long process, a positive for owners is that they don’t have to wait for current owners or tenants to move out before they can move in.

For many, moving into a new house requires renovations, costing thousands of dollars on top of the new house. This can add a little bit of value to the home, which will help should you ever go to resell, but they’d have to be the right renovations. However, if you do a good job on the build, your property could end up being worth more than you paid as soon as your finished – 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:

  • Sydney
  • Melbourne
  • Adelaide.

If this is your first house, you might also be eligible for the First Home Owners Grant – it’s not just an option for already established homes. That could be a saving of thousands of dollars, depending on where you reside.

Time it right, and it might be cheaper

Developers have a quota of properties they need to sell off the plan in order to meet their finance and begin construction. This means you may be able to find lower prices on offer if you get in early in the first stage of sales. Of course, buying off the plan has many risks, and you should be aware of those risks before making any decisions.

You only pay stamp duty on the land when you build

When you build a home from scratch, you do not pay stamp duty on the house – only on the land. This is also true if you move into a newly-built home that has never been lived in before.

On the other hand, there are other extras you pay for when you build that you don’t face when you buy an existing home, such as fences, driveways, and a garden.

As evidenced above, stamp duty costs can rack up into the tens of thousands of dollars. If you’re a first home buyer, then you may be eligible for a concession, but many people aren’t in this boat. Building a home means you only have to pay stamp duty on a lot of lands and not the property itself. To show you how much that can make a difference, let’s take Sydney as a case study.

Building on the median $459,000 land lot in Sydney will mean you have to pay around $16,000 in stamp duty on the land. In comparison, buying an established property in Sydney at the median price of $889,000 will cost you around $35,000 in stamp duty, more than double what you would pay if you built.

Building new – Disadvantages

A drawn-out process

A common complaint is a time it takes to build a new home, with the original lengthy time frame often stretched out even more if there are any hold-ups, mistakes or clashing schedules with various tradespeople.

When you build, it takes time, and a certain number of delays due to bad weather are practically guaranteed. As we mentioned above, the Australian Housing and Urban Research Institute (AHURI) says it can take up to 7.5 months on average to construct a new home from scratch. The time it takes to build a house has nearly doubled since 2000, as house designs are typically larger and more complex these days.

Many home loan lenders restrict borrowers by requiring that the house must be completed or at least begun within a certain timeframe of settlement. If a borrower is unable to meet time restrictions, they should contact their lender for an extension. Required timeframes for completion can range from 6 months to 24 months.

Downsides for investment

Finally, in terms of investment potential, there can be some significant drawbacks buyers and investors should consider. If it’s not in a central location, this could lower the value of the property.

Furthermore, there mightn’t be as good potential for capital growth in a new build. In an older or established home, you can often generate more capital growth by making a few updates and renovations, which can give owners notable returns. In a new development, however, where all other buildings are of a similar standard, and no updates are required, this gain can be hard to create.

Factors out of your control

The elements are fickle creatures and something humans have no control over (yet). If it rains for three weeks solid at your build site, then construction will be halted, lengthening the time it takes to build your home and costing you money. Delays could also come as a result of poor quality, equipment failures, labour shortages and council approvals.

Less character and space

Another common downside is that some new builds can be a bit “cookie cutter” and lack the character and originality of an older build. Furthermore, when you build new, you won’t have the established gardens and landscaping you’ll find in an established property if that’s important to you.

While the floor plan and design of new homes may constantly be improving, the size of the land they are on is decreasing. New houses are typically now built on smaller lots than they used to be, due to rising land prices. This in turn, generally means smaller rooms and backyards.

Location, location

Location can also prove an issue – a lot of new developments are often on the outskirts of cities and not in central locations. Furthermore, if it is in a new suburb, there may not be established facilities – or even a community- for several years to come.

In new estates, owners may also have to put up with noise from ongoing construction work for years to come.

In most capital cities around Australia, land costs a fine premium. Even if the actual house build is not terribly expensive, you may have to pick your area carefully when choosing a block of land.

The hidden costs and uncertainty

And while there may be cost savings, those building new properties often find there are hidden costs which they may not have accounted for. This could be associated with site costs, landscaping or paying for extras that are not in their builder’s list of standard inclusions.

There’s also a lack of certainty which can add stress and an element of risk to a new home build. As there is no property to inspect physically, the buyer must place all their trust in the property plans and builder, and they may not know exactly what they’re getting until it is complete.

Progress fees on construction loans

Construction loans involve progressive payments as you build, so be sure to check the fee structure of the payment schedule for any loan before signing up. Some lenders charge a fee to process each payment, while other lenders only charge a one-off fee.

The cost is not fixed

When building, costs can spiral out of control if you aren’t carefully monitoring what is being spent and where. With some builders, the fee does not include everything you thought it would – driveways or light fittings might cost extra, for example. Check your builder’s contract carefully for all the inclusions you need.

When buying off the plan, buyers should be careful to ask a lot of questions about the display home shown to them. You don’t want to find out that the expensive tiles and light fittings used in the display are not included as standard, but rather cheaper versions that aren’t as good. 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 need to factor in how much it will cost them to live somewhere else while they build. Even if you can move in straight away during construction, you are guaranteed to be surrounded by the chaos of construction until it is completed. When moving into a new estate, home builders may find that if their home is completed early and the other homes around them are still going up, they can expect ongoing construction noise and dust in the air.

Building a home might feel like a herculean task, especially if it’s your first. But there are some very real advantages to building over buying an established home. Your life really begins when you realise you don’t have to buy a house – you can build one instead.

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