With interest rates at an almost record low in Australia, buying a home has suddenly become a very real possibility for families, property investors and first and second-home buyers. However, if you're a house hunter who knows exactly what they want, building a home from scratch to your exact specifications is a tempting option. With so many details and factors to consider, choosing whether to build or buy is not an easy decision. In today's blog, we're going to help make the decision a little easier by delving into some of the most common questions and concerns we hear from people who are looking to buy or build a home. Don't worry, the answers are coming - keep reading to find out more!
How much does it cost to buy a new home?
This is kind of like asking how long a piece of string is - the cost of buying an existing home depends on many factors such as the location, size, and quality of finishes. In the first quarter of 2021, Melbourne's median house price increased by $41,000 to $1.02 million, making it the second most expensive city in Australia to buy a house. However, interest rates are currently at a record low, giving house hunters great buying power despite these high property prices. With patience, good research and some expert advice, the costs of buying a home are manageable for some people.
Buying a new home may e expensive, but owning real estate is still considered one of the best ways to grow wealth because the value of your home can increase over time. Plus, the property market is much less volatile than other investment strategies so there's less short-term financial risk. That's why we tell our customers it's important to weigh the initial cost of buying an existing home against potential long-term gains.
How much does it cost to build a new home?
Many people assume that buying an established home instead of building a new home is more cost-effective, but that's not always the case. If you want to turn your home-owning dreams into a reality, custom building a new property shouldn’t be ruled out.
According to ABS Buildings Approvals data from 2019, the average dwelling in Australia spans 229.8sqm, which puts the cost for the build portion at $320,238. This cost includes all the materials, labour and subcontractors' fees needed to complete the build. Depending on the size and location of the property, when it comes down to the total price paid by a buyer, buying a new home can actually be more expensive than building one.
Based on our experience, the last thing you want to do is buy the wrong property. Building your own home allows you to get the exact property you want and cuts out the middleman altogether. Plus, if you plan on selling your new home in a few years' time, it's much easier to sell a custom-built home than one that's been converted into an apartment or townhouse, so the potential resale value of a custom-built home means that it can be more cost-effective to build than to buy.
Is it cheaper to build a new home or buy an existing home?
One of the most common obstacles to breaking into the property market or expanding your real estate portfolio is money, so it's no surprise that this is the first question on people's minds. When you're comparing the cost of building a new home to the cost of buying an existing one, there are various factors that need to be considered. There are a number of things we consider when comparing two properties, including location, size, number of bedrooms and bathrooms, and the quality of finishes.
The key question to ask yourself here is how much you can afford to spend on your home purchase or build. Contrary to popular belief, buying an existing property isn't necessarily any more affordable, and you don't get the opportunity to customise it to your exact specifications.
If you are leaning towards a custom-built home, we can give you some great advice to help keep it within your budget. Our professionally designed new homes are tailored to your exact needs and taste, so it's possible that we can build a new home that's an even better value than the one you want to buy. Our home designs are cleverly crafted to make the best use of space, and our new homes are designed to be more energy-efficient than most traditional homes. That means we've designed them to cut down on your electricity bills, which makes this option even more cost-effective.
Building VS Buying: Conclusion
At the end of the day, buying or building your way into the property market is as much about your future expectations as it is about your budget. If you're looking for a new home that's accessible to the city, gives you enough space, or just wants something different from the rest, talk to us today about our range of new home designs. Come visit us in one of our showrooms or contact us online to find out how much it will cost to build your new home.