The Pros and Cons of Buying vs Building a New House

Should you buy an existing home or build a new one? It’s an age-old question, especially for first home buyers. On the one hand, building a brand new home is unquestionably exciting. There are a lot of things to consider, of course, however, creating your own comfortable home and uniquely yours makes it all worth it.

If you’re thinking of purchasing an existing home, the planning process does not require as much time as it would when building. However, it may not exactly be your dream home, and you could end up settling for something that doesn’t work for you and your family.

Regardless of your choice, we know that the home-buying process can be complicated. There are so many factors to consider, and it gets even more complex as you decide whether to buy or build. Whichever you decide, both have benefits and limitations.
We’re here to help you decide by taking a look at both sides and their advantages and disadvantages. From there, we hope that you can ultimately make the right choice between buying an established house or building your own dream home.

Costs of Buying vs Building a House

First, let us get the costs out of the way. Some people tend to focus on this aspect, which is why we will tackle it first. Is it cheaper to purchase or build? A quick Google search will tell you that the average cost to build a house in Australia is $313,800. The values vary, of course, with the location being the primary influencing factor. In Western Australia, the average cost to build is $1,000 to $1,250 per square metre. In Perth, some areas are pricier, reaching $2,700 per square metre.

Meanwhile, buyers of existing houses just recently saw a huge increase. The national average price of an established home was $835,700 in the 2021 June update. Perth homes cost around $545,000 in the same period.

Buying a House Pros and Cons

Are you planning to buy a house? If so, here are the advantages of purchasing an existing home:

• If you need to move into a new home quickly and do not want to wait, buying an established home is an option for you. Although it may seem like there is no waiting time involved, settlement dates can be anywhere between 45-120 days depending on the contract.
• Buying an existing home could save you a few dollars, depending on land size and location. Interest rates and down payments can vary, so it’s beneficial to consult professional services to make sure you’re getting the best deal.
• If you choose to purchase an existing house, you will find that you have a lot of options. There may be a lot of options in developed areas and suitable blocks of land with established homes already built on them.
• Another benefit of buying an existing home is that it may already have some landscaping that you don’t need to do yourself or make small changes to suit your style.
• While it is true that an existing home reduces customisation, it does not mean you cannot personalise it. You can renovate and upgrade, however, there could be a fair amount of limitations depending on the age of the home, the materials used to build it. It’s best to get a full structural report before purchasing an existing home.
• One more advantage is that there’s relatively no pressure in upgrading your home. You can do all the renovation you want once you have the budget and time available.

Of course, buying a house has some cons, as well. Here are drawbacks to consider:

• While you do not need to wait for the house to be completed, you still have to exert effort and spend time looking for the right home. You can already tell that this process is time-consuming.
• You will also likely not have the home of your dreams, which can only exist if you design the house yourself. You end up compromising on different areas, including the floor plan and the overall look and feel of the home.
• There’s also the possibility of a bidding war against other buyers. The market may become quite competitive when you decide to buy, which can be stressful.
• You could also face several maintenance issues involving old appliances, electricity, and plumbing.
• Older houses are often less energy efficient.

The good news is that many of the houses you can buy in Perth are newly built. Pick a good location where you want to live, and you just might spot your ideal home.

Building a House Pros and Cons

Like buying, there are also pros and cons of building a house. Let’s start with the reasons why choosing to build may be preferable to buying:

• You have total control of all the features of the house, including the size and layout.
• You can freely customise the house to reflect your style and tastes.
• You do not have to deal with competing buyers, particularly after buying the land.
• Building means you get a brand new home. It’s already an advantage on its own. Additionally, a new home also means lower expenses on maintenance.
• Home loans are often provided as construction loans. Payments are much more manageable since you can make incremental payments as you progress through different stages of the building process.
• You also get new appliances and fittings that are according to your preferences. New homes today are mostly built with energy efficiency and green architecture in mind. You have a fantastic opportunity to construct a sustainable and environmentally friendly home.

Now, let us talk about the negative side of building a home:

• There could be unforeseen costs that could go beyond your plans. It’s vital to have extra funds or at least have a strategy for such an occurrence.
• Building can take a bit more time than buying an existing home depending on how customary your choices are.
• You may need to spend a little more time figuring out the building process which can be stressful but also very exciting when choosing colours, materials and what will make your house a home.
• You will have to work with several people and businesses to ensure that the outcome of your efforts is your dream home. You’ll have to make countless decisions and be prepared to make changes when needed.
• Preparing the block of land where you will build may take extra resources, but if you have the right team managing the preparation, it can be very little effort on your part.

Contrary to popular belief, building your home is not always more expensive than buying an existing one. There are also government grants that can help you with the construction costs. If you’re a first home buyer, you could receive $10,000 from the state government as part of the First Home Owner Grant (FHOG) initiative. Another thing is that buying requires paying stamp duty, which is charged on both the land and the house. If you choose to build, stamp duty only applies to the land, saving you hundreds or even thousands of dollars.

The Bottom Line

Whether buying or building a house, you need to spend a good amount of money, time, and effort. You can hire a general contractor if you’re aiming to build or a real estate agent if you wish to buy an existing home. In both options, assistance from a certified and experienced professional can help make the process go smoother and less of a hassle.