How to decide between new and established when buying property

Having saved a deposit, you decided that the time is right for you to get on the property ladder. And as with most novice buyers, your parents were your first stop for advice and then you most probably conferred with your friend.  

Based on their experience, your parents are telling you to buy an established house with a big block however all you friends are buying new houses on small lots or unit and enjoying an inner-city lifestyle.

This article will help you decide, which one’s the right option for you.

Older houses tend to be built on larger blocks of land, while new home buyers or builders more often qualify for government grants and subsidies. And do you really need that big backyard? Townhouses and apartments may be a better bet if you’re starting out in the real estate market.

However, there are pros and cons to new and old houses and units that apply when looking at homes for sale:

New houses and units for sale – pros:

·           Buying ‘off the plan’ will usually give you a discounted price and you may be eligible for reductions on stamp duty

·           There’s less risk of a serious fault, and potentially lower initial maintenance

·           You’re more likely to be covered by government construction and finance protection insurance schemes

·           Building your own new house allows you to choose the design and customise the interior and exterior before construction begins

·           Better technology and more modern design often mean lower energy costs and higher efficiency.

New houses and units for sale – cons:

Buying ‘off the plan’ means your home hasn’t been built yet, so you’re buying sight unseen and may have to wait a year or more before it’s ready

·           Building your own new home takes time and may involve the stress of project managing the build yourself – things can go wrong

·           Fear factor – what happens if the development falls through? Make sure you speak to your legal representative about the potential repercussions and precautions

·           There’s higher risk of potentially costly defects that require fixing if the builder does a rushed job

·           There is a probability of cost blow out, your lender will most probably expect you to cover the variation cost if the valuation doesn’t reflect the added cost.

Established houses and units for sale – pros:

·           There’s more potential to buy a bargain fixer-upper and improve capital value over a shorter time

·           These properties are more likely to retain value in a slow real estate market

·           They tend to be positioned in well-established neighbourhoods with a better ‘community’ neighbourhood feel

·           Older houses tended to be built by craftsman, so build quality can often be higher.

Established houses and units for sale – cons:

·           Older, unimproved properties will often require work, and expense, to bring them up to modern standards and interior design finishes

·           Unimproved older houses and units as investment properties often attract lower rents and less reliable tenants

·           Older properties may be less energy-efficient and, thus, more expensive to heat or cool

·           There are also liabilities relating to asbestos and lead paint and piping, which should be considered

·           There’s higher risk of existing and potentially costly defects that require fixing.

Which ever option you chose, remember to do your due diligence. If buying new, research the builder and for established house, building and pest inspection is a must. Finally, borrow wisely and within your means.

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This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.