Choosing between building a new home or buying an established one is emotionally and financially significant. With higher inflation in the building sector, the wrong decision can leave you in financial ruin. Conversely, if you get it right, you can make a healthy profit and set your family up for life.
In this blog post, we will explore the pros and cons of new construction and established homes in Australia, shedding light on the role of a buyer’s agent in guiding prospective homeowners toward the right choice for their circumstances.
Pros and Cons of a New Build
- Modern Amenities- New constructions often come equipped with the latest technology and energy-efficient features, offering homeowners a more contemporary living experience.
- Warranty and Guarantees- Builders typically provide warranties on new constructions, covering defects and structural issues and providing peace of mind for the homeowner.
- Customisation Options- Buyers can often personalise their homes during construction, tailoring the design and finishes to suit their preferences.
- Higher Initial Cost- New constructions tend to have a higher upfront cost compared to resale homes, reflecting the expenses associated with land acquisition, development, and modern amenities.
- Lower Land-to-Building Ratio – You must pay more to construct a new home, which means the land-to-building ratio isn’t in your favour. Over time, the land increases in value, and the building depreciates. So, the higher the land value compared to the building value, the better your long-term capital growth prospects will be.
- Completion Delays- Construction projects may face unexpected delays due to weather, labour shortages, or other unforeseen circumstances, leading to potential frustration for homebuyers.
- Limited Established Infrastructure- New developments may lack mature infrastructure, such as schools, parks, and public transportation, impacting the overall convenience of the neighbourhood.
- Cost to build – It will almost always cost more than you think. If you believe your new build will cost you $1,500,000, add 10-20% to be safe. (Photo: Boro Homes)
Pros and Cons of buying an established Home
- Established Neighborhoods- Resale homes are often in well-established neighbourhoods with amenities, mature trees, and quality schools and offer a sense of community.
- Higher land-to-building ratio – If you buy an older established home that has already depreciated over time, a higher percentage of the dollar amount goes towards the actual land value. Over time, it’s proven that the land increases in value while the building depreciates.
- Negotiation Opportunities- Sellers of resale homes may be more open to negotiation, depending purely on their motivation.
- Quicker Move-In- Unlike new constructions, most established homes are ready for immediate occupancy, allowing buyers to move in sooner.
- Maintenance Costs- Older homes may require more maintenance and renovations, potentially leading to higher ongoing costs for the homeowner. You can also expect to pay higher heating and cooling bills in an older home versus a brand-new build.
- Outdated Features- Resale homes might have outdated features and appliances, requiring additional investment to modernise the living space.
- Hazardous building materials. Older homes can sometimes be used with a substance called asbestos. This building material can be dangerous if it enters your system. Asbestos is now illegal to use in Australia, but from 1930 to 1970, it was widely used. Asbestos was used in wet areas and also in fences and roofs. To replace an asbestos roof would be highly time-consuming and expensive.
The Role of a Buyer’s Agent
In navigating the complexities of the Australian real estate market, engaging a buyer’s agent can be a game-changer. Here’s how:
- Market Expertise- A buyer’s agent possesses in-depth knowledge of the local real estate market, helping homebuyers make informed decisions based on current trends and future projections.
- Negotiation Skills- A skilled buyer’s agent can negotiate on behalf of the buyer, ensuring they secure the best possible deal in terms of price and contract terms.
- Understanding Your Needs- Buyer’s agents work closely with buyers to understand their specific needs and preferences, helping them choose between new construction and established homes based on individual priorities. This can easily be determined early based on your budget and location preference.
- Streamlining the Process- Navigating the intricate home-buying process can be overwhelming. A buyer’s agent simplifies the experience, providing guidance at every step to ensure a smooth transaction.
For more information, watch our latest video featuring our clients and their experience working with our team.
Whether opting for the sleek allure of new construction or the charm of a resale home with history, the decision ultimately hinges on individual preferences, lifestyle, and budget.
Leveraging the expertise of a buyer’s agent can significantly ease the decision-making process, ensuring that prospective homeowners make informed choices tailored to their unique needs and aspirations in the ever-evolving Australian real estate market.
Industry Insider Property is an independent advisory company committed to helping buyers & sellers achieve their desired outcomes. Our experienced team will guide, execute, and deliver the best possible results for your property purchase. To save time, reduce stress, and potentially save or make money in the long run, hiring a buyer’s agent or selling advisor is your secret weapon when buying and selling a property.
Contact us today via phone at +61 8374 7652, email at email@example.com, or text message at +61 402 346 810 to learn more about our services and how we can help you buy or sell.
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