It’s a buyer’s headache, whether you’re purchasing your dream home or an investment property. Do you opt for the wow factor of a brand new house in an up-and-coming area, or the tried and tested property in an established suburb?
Let’s take a look at the practical pros and cons of new versus existing property.
New house pros
- Builder’s warranty. This valuable document guarantees repair or replacement of faulty fixtures, fittings and workmanship for a fixed period of time, reducing the financial burden.
- Low maintenance costs. Even when the builder’s warranty runs out, a new property requires far less maintenance and repair over the first ten years than an established property.
- Move straight in. There’s no hanging around, waiting for existing owners to vacate. On completion, you can make the property your own.
- More choice. Most new home builds and house and land packages give you plenty of choice regarding colour, décor, style and optional extras. If the house is an investment property, select dark colours and durable fixtures more suitable for tenancy.
- Depreciation. Owners of new or newer investment properties are entitled to claim depreciation on building structure along with fixtures and fittings. This attractive tax benefit has encouraged many new investors to take the property plunge, returning up to $80 in tax deductions per week on a new home with $30,000 worth of fixtures and fittings.
New house cons
- More remote location. Many new housing developments are in far outer suburbs, where large scale land releases are still available. Sites become scarcer and more expensive the closer you get to Australia’s big cities.
- New house premium. A premium is generally paid for the convenience of a new house, meaning higher monthly repayments and increased potential for housing stress.
- Additional and hidden costs. Many new homes present the outside area as a blank sheet, so check your contract carefully for extra costs involved in provision of landscaping, driveway, fencing and pathways.
- Smaller lot sizes. Modern developers often keep housing costs down by drastically cutting lot sizes. This means your nice new home might have smaller rooms or outdoor spaces.
- Reduced privacy. Residents on new estates are often shocked by the bare landscape and lack of screening from trees and bushes. The green environment will often take years to develop and provide privacy.
Established house pros
- More desirable locations. Established homes are often found in convenient locations close to shops, parks and public transport.
- Greater choice of services. Having grown up over many decades, established suburbs generally offer far greater choice of childcare, schools, medical centres and specialists.
- Greater negotiating power. There’s far more scope to wrangle over the price of an established home, meaning monthly mortgage repayments have the potential to be lower. Most new homes are offered at a fixed price.
- Established outdoor spaces. With gardens, driveways and fences already in place, there’s far greater neighbour privacy and more aesthetic appeal. Not to mention money saved on establishment costs.
- More gracious living. Many older properties were built with higher ceilings and larger rooms.
- Bigger gardens. While the days of the quarter-acre block have passed, there are still plenty to be had around Australia’s cities and suburbs. Beat the developer and snap up a quarter-acre home while you still can.
Established house cons
- Older home with fewer conveniences. It might be bigger and in a more desirable area, but an established home – unless renovated – may lack modern style and convenience.
- Higher maintenance and repair costs. Properties passing the ten-year mark start to show distinct signs of wear and tear. Things start to break and systems start to malfunction. Maintenance can start to get costly – particularly with the big ticket items like guttering, plumbing, roofing, wiring and rotting wood.
- Potential for hidden problems. As houses age, more serious problems can occur. That’s why it’s so important to get pre purchase property inspections. Melbourne and Sydney have many beautiful older homes with issues requiring attention. It’s vital to cost them before making an offer.
There are pros and cons to new builds and established homes. What you choose will depend on your personal preferences. Do your homework either way before you buy, and take the time to think carefully about what you want in a property.
By Darel McBride
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