To Build or to Buy Your Dream Home? Unveiling the Pros & Cons

July 23, 2024

You’re finally ready to buy your dream home. What does it look like? An established house in a leafy suburb, or a brand-new home that’s custom built to your tastes? Is it cheaper to build or buy a house? How long before you can move in? Realising your dream will depend on a number of factors, not just the price you’re prepared to pay. Here’s a rough guide to help you decide.

The Process of Building a House

When you build a house, you get to say how it will look, inside and out. But building a house is labour-intensive and requires multiple trades.

It involves:
Choosing your location and purchasing the land.
Choosing a Project Builder and selecting a design that suits your requirements.
Hiring a reputable builder or contractor to construct your house according to an agreed timeline.

Most people will take out a construction loan, which makes progressive payments as the build goes along. There are many moving parts, but using one of the builder’s standard designs with minimal modifications, and using a reputable, efficient home builder makes costs more manageable.

The Ins and Outs of Buying a House

When buying a house, the process is simpler. Once you’re pre-approved by a lender, you can shop around and make an offer on an existing home. If your offer is successful, a deposit of usually 10% is paid, and the balance at settlement. Buyers that choose a fixed rate home loan to make the purchase will enjoy more predictable loan repayments going forward..

Whilst looking for a home can take some time, the process can make you aware of things you might not have considered before. Using this knowledge, and a little personal taste, you may be able to reconfigure an existing property into something fresh and new.

A qualified Real Estate Agent streamlines the process by bringing appropriate properties to the market, guiding buyers through negotiations, and assisting with paperwork. But, although they may be helpful, it’s important to remember that the agent is legally required to work in the best interest of the seller, not you. This is why there is a growing trend for buyers to pay extra (usually an extra $10-15K or 2%) to have a qualified Buyers Agent work exclusively for them in the bidding and/or the whole buying process of an existing home.

Smart buyers ensure they pay for a qualified building inspector to check everything: from taps and plumbing to electricity, and air conditioning units. They also check things like structural integrity, guttering, and easements. Remember, EVERY house has things that have, or will, go wrong with it. You must decide what you’re prepared to take on.

Even with improvements factored in, buying a house with an established garden can save you a lot of time and trouble.

The Advantages of Building a House

That said, building a house means getting exactly what you want in a new and modern setting. Brand new homes are usually covered by a 90 day rectification period from the builder, plus a 7 year building warranty. (NB if the home is built by Resimax Group owned Tick Homes, you’ll receive a 20 year Structural Building Warranty!) Also, a new build will generally require much less maintenance than an older home. On top of that, you’ll probably enjoy lower energy costs due to better housing design and more efficient appliances.

Design Freedom and Personal Touches

The freedom to design what you want allows for customisation, better build quality, personalisation, and stronger long-term value. You create a space you want to live in; one that suits your preferences and lifestyle. That’s a major attraction when you’re diving into perhaps the biggest investment of your life.

You get access to the latest, energy efficient construction materials and techniques. This typically results in a better-quality build and fewer problems.

Future-Proofing Your Investment: Energy Savings & Sustainable Design

New builds also incorporate energy efficient technologies that make them cheaper to run. Sustainable design features, like passive solar and ventilation offer long term savings. An energy-efficient home means lower energy bills, which reduces the overall cost of your investment. It’s cheaper to maintain and much more attractive if ever you decide to sell.

The Advantages of Buying a Home

Of course, buying an established property means you may not have to find somewhere to live in the meantime. The house may be pretty much ready to move in. However, some people will choose to do repainting, re-carpeting, or other renovations and repairs first while the home is empty.

Fast Track to Home Ownership

Established homes can usually be settled in a few months, and you know exactly how much money you have to commit. Buyers can get to work on making the house their own long before a family that is waiting for a build to be completed.

Established Neighbourhoods and Community Vibe

You’re also moving into an established neighbourhood, with fully grown trees and a strong sense of community. You’ll have neighbours ready to offer advice, and infrastructure like schools, parks, shopping, and transport within easy reach.

Cost Comparison

The financial aspects of both options should be measured objectively against your priorities and your budget. Don’t forget to include any rebates or discounts that may apply. The federal government’s First Home Owners Grant, and other state government benefits may assist first home buyers with Transfer Duty (Stamp Duty) concessions. And some lenders often provide discounts for loan fees, and interest rates too.

Analysing the Costs of Building a House

You’ll be paying interest from the start of the loan, so you’re taking a major risk if there are delays in building a house. You don’t want to be subject to poor project planning or a builder going bankrupt. Look for one that is backed by a substantial asset holder. Tick Homes, for example, are guaranteed by the Resimax Group. With Tick, you also receive a 20 year structural building warranty on your investment!

A major benefit of a construction loan is that the loan is usually ‘Interest only’, which reduces your monthly mortgage payment. Once the construction is complete, the construction loan converts to a normal Principal and Interest home loan.

There may also be energy efficiency rebates. Are there incentives for solar panels and other sustainability features? Make sure your builders aren’t keeping those to themselves!

Some states offer major stamp duty savings or exemptions specifically for new homes and/or First Home buyers. These are part of initiatives aimed at stimulating the construction industry and encouraging homeownership.

Financial Implications of Buying a House

How much money do I need to buy a house? Buying a house usually requires sufficient capital for a deposit, usually between 5 and 20% of the total price. Discounts aside, you’ll need to pay stamp duty on the agreed purchase value – this could be more than double that of buying land and building your house on it. Stamp duty is a state government tax on property transactions.

You’ll also pay conveyancing fees to your solicitors, and the cost of any building inspections (or improvements) you want to make. Don’t forget any owners corp fees (if applicable), local council rates which, apart from ongoing repairs and maintenance, are a long-term expense.

It is also worth remembering that the costs for essential building inspections on established properties that you choose not to buy or miss out on, plus Buyers Agent fees all add up on existing property purchases.

Making Your Decision

Factors to Consider Before Building

When deciding whether to build or buy a house, you will need to consider how much time you have, your willingness to handle stress, and your appetite for risk.

People who build a house sometimes run into unexpected setbacks. Delays can set construction timelines back months. Therefore, a timeline agreement with your builder is essential. You don’t want to be the one paying if there are any delays. This is where Resimax offers something unique in the market, that protects you against price rises, building delays and stress. Instead of the usual separate land contract and building contract, where you settle the land first and start paying a mortgage immediately and throughout the build process – Resimax, being both a land developer and builder, can remove this risk by offering an ‘off the plan’ house and land contract, where you can just put down a 10% deposit, and only when its complete (irrespective of any delays) will you settle and pay the balance – not only saving the buyers a lot in interest payments, council rates and stress as examples – but allowing extra time to save.

Either way, building a house is a big commitment in time and energy. You should investigate every option and consider what the most important considerations are for your family.

What to Know Before Buying

Of course, any investment in your future has intrinsic value. But if you decide that it’s just quicker and simpler to buy an existing home, you’ll want to study the local housing market. Work out if it is a good time to buy right now. Are homes in the area likely to retain their value? You can get a lot of advice on this subject and you’d do well to hear all of it before making a decision on what to buy.

Be sure to have a property checked for pests and structural weakness. A building inspection is a one-off cost that could save you thousands.

Unsure if building or buying is right for you? Eynesbury Estate can help you.

If you’re not sure about your goals, or are having a bit of trouble deciding, talk to a professional. Eynesbury offers free advice on all the options available.

Guided by the principles of variety, accessibility and community, Eynesbury homes are built on attractive streetscapes, with modern features and fittings, are energy efficient, and designed with families and communities top of mind.

Contact Eynesbury today and inspect the stunning house and land options on offer in our visionary community.