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Building Versus Established

Before we get into this section, we must give a little disclaimer. The opinions expressed here aren't those of FirstHomeBuyer.net.au, they have been taken down interviewing Licensed Real Estate agents and people that are employed by builders, be advised that these people make money out of the established and to be constructed housing industries.

With Building and Established properties, supposing the main difference from a financial assistance point of view, is that currently you receive an extra boost from the standard First Home Owners Grant when buying a newly completed home. Although this is one consideration, it shouldn't form the base of your decision. It should also be noted you are ineligible for the $2,000 REBA grant should you construct.

When looking at established versus new, you need to look at the location. Traditionally all of the best areas around the city have already been constructed in, their price forming a pecking order of their locations and appeal. Closer to the city, rivers and ocean will give you a higher chance of growth now and into the future, also these areas will most likely have a higher entry price than those further out from major cities, oceans and rivers. Given that your first home will be, most of the time, your most valuable asset, then any opportunity to optimize, or make that investment work harder for you should be considered.

Conversely there are lower thresholds for stamp duty on land or vacant lots, this can limit the locations in which you may buy land as a first home owner. If you start in the CBD and drive out of the city, you will notice it will take some time, and distance, before you get into a new subdivision that will have a great deal of land for sale. En masse you will find most of the areas you have a wide ranging choice of land in, will be in the outer, less developed areas . If you are reliant on public transport, you shall need to consider this. But on the other side of that equation, is as an area grows, prices may come up rapidly as more infrastructure like public transport, shopping, schooling and recreation facilities comes to that area.

Which brings me to the next point, when you construct, what do you end up with, what is included when you build? You need to consider all the little things that make a house a home, when weighing the cost of construction versus established homes, some of these are;

  • Your cost of accommodation whilst you build
  • Landscaping front and rear (front landscaping and reticulation are included in many new areas)
  • Curtains, carpets/ floor coverings
  • Painting
  • Brick paving to outdoor areas
  • Patios/ pergolas
  • Sheds
  • Air conditioning and heating
  • reticulation

Having to add all of these things once your house is built can run into a great expense, it is strongly recommended you get a good idea, of all the little extras you will need to finish off your home, and budget these into your total costs and affordability, how will that compare to what the property is worth once it has been completed?

The upside of building is that you decide what your house will look and feel like, everything  is new and shiny, for some this can outweigh all else.

With established property, you normally get a complete home, in a well established area. Real Estate agents are forever saying, the golden rule is to 'get the worst house in the best street you can afford to buy in'. The next one always seems to be, 'buy as close to the CBD (city) as you can', as this will most of the time mean your first home will go up in value faster than those further away. Another point with established homes is that they exist now and have been lived in before! Sounds silly, but this means, most of the time they have established gardens, outdoor areas, patios, reticulation, air conditioning, though maybe not so attractive, they have window treatments and should be painted also. Now none of these things are normally new, some of them may need to be replaced, but all of it should work and be serviceable at least. You haven't been able to choose the layout of the home, but you should have a complete, ready to move into, functional first home.

Some of you may also deliberately choose a 'run down' established home you can renovate, adding value that way, this gets back to the worst house in the best street rule mentioned earlier. But regardless of which way you go, look at the total cost of what you are getting into, if you buy an established home that needs new paint, curtains or even a kitchen or bathroom renovation, factor those into the price you are willing to pay. Your main consideration, when deciding what is best for you, should be looked at as what represents the best value for you. Value can be measured by the potential of the location alone, regardless of the condition of the property that sits on it, or it could be the house that is a perfect fit for a young family, the definitions for value are very personal and should be well considered by all potential first home buyers.

The 7 steps to buying your first home