New Build or Existing Home: Weighing Your Options

15 April, 2024: When you’re in the market searching for a property, you’ll come across both new builds and existing properties. The debate between both property types is more relevant than ever as new builds become more popular due to lower supply of available existing housing.

There are upsides and potential downsides to purchasing both new and existing properties – let’s explore them.

New Builds

These are properties that are newly constructed and have never been lived in before.

Advantages of New Builds

  1. Customisation Opportunities: Buyers can often choose their home design and layout before the construction is completed. They typically also come with more modern features, amenities, and technologies.
  2. Lower Maintenance Costs: Newer homes typically incur fewer maintenance and repair expenses, and instances where they arise, they will often be covered by the builder’s warrant.
  3. Government Incentives: Government programs like the First Home Owner Grant are available for first home buyers purchasing only newer properties, as opposed to more established properties.

Disadvantages of New Builds

  1. Premium Pricing: New builds often come with a premium price tag. Buyers are paying for the privilege of being the first occupants, along with the modern features, amenities, and technologies.
  2. Limited Capital Growth Potential: The land value component is usually lower whilst the building value is higher, often resulting in quicker depreciation rates that can dampen the property’s growth overtime.
  3. Less Desirable Location: New developments are often built in areas that may lack infrastructure.

Established Properties

These are properties that have been previously owned and lived in.

Advantages of Established Properties

  1. Established Neighbourhoods: A more robust network of infrastructure such as schools, shopping centres, public transportation, and recreational facilities.
  2. Capital Growth Opportunity: These hold more value in the land over the building, and land value typically appreciates whilst building value depreciates. Additionally, these areas often become more desirable overtime, and this can contribute to the property’s appreciation.
  3. Value Enhancement: Value can be added easily through renovations and additions like granny flats. This can occur through both cosmetic and structural improvements.

Disadvantages of Established Properties

  1. Higher Maintenance Costs: Unexpected maintenance and repair expenses may pop up from older homes that are not covered by warranties.
  2. Outdated Features: Existing homes may lack the modern amenities and may not be as energy-efficient, leading to higher utility costs.
  3. Higher Insurance Costs: Older homes can sometimes carry higher insurance premiums due to the increased risk of issues like plumbing leaks or electrical fires. Additionally, if the home has unique historical features, these may be more expensive to repair or replace.

In summary, newer properties offer modern amenities and fewer maintenance headaches, whilst older homes typically offer a better investment in more established neighbourhoods. When navigating the choice between the two, it ultimately comes down to your individual preferences, lifestyle, and financial considerations.

If you would like to learn about FrontYa’s shared equity program to purchase a new build or existing home, please click below to start the conversation.