Let’s Settle the Age-Old Housing Debate: Build or Buy a Home?

By Deltos Finance on December 14, 2023
A contemporary home in Australia

When entering the property market, many potential homeowners and investors face a dilemma: should they build or buy a home? Buying an established home may seem a quick and easy path to homeownership, but there are certain advantages to building a house that you should also consider. So, today, we’ll try to settle the age-old housing debate: building vs buying a home. We’ll also throw another option into the mix: buying off the plan. We hope this blog helps you weigh your options. 

Building a Home: The Path to Customisation & More

Before purchasing a vacant lot and applying for a construction loan in Hobart, here are some pros and cons of building a home you should think about: 

Pros of Building a Home:

  • Customisation: Building a home allows for personalisation at every step. You can choose the layout, materials and even the smallest details like tile colours. Imagine designing a kitchen that perfectly fits your culinary needs or a home office that’s an oasis of productivity. If you choose to build your home, you can freely select details that reflect your personality and lifestyle.
  • Energy Efficiency: Since you can pick the materials and finishes when building a house, you can ensure its energy efficiency. You can decide to hire builders with a good reputation for employing sustainable materials and practices. That way, you can have a home that saves you thousands in utility bills and reduces your impact on the planet.
  • Lower Stamp Duty: You only pay stamp duty on the land, not the building, which can result in significant savings. Some states and territories also provide stamp duty concessions to first-home buyers or special duty rates after concessions, but be sure to check your eligibility for those before deciding. 

Cons of Building a Home

  • Time-Consuming: Constructing a home can take a considerable amount of time, often requiring you to juggle rent & mortgage payments simultaneously. 
  • Unpredictable Delays: Weather, labour shortages, and material availability can cause unexpected delays in building your dream home. 
  • Location Limitations: Finding vacant land in desired city areas can be challenging, often pushing new builds to the outskirts.
Buying a home

Buying a Home: The Route of Convenience

If building a house is your path to customisation, buying an established home offers an equally important benefit: convenience and immediate availability. Let’s explore the pros and cons of buying a home below. 

Pros of Buying a Home:

  • Immediate Availability: Once the purchase is complete, you can move in immediately. You can enjoy the new house right away. Also, you don’t have to worry about paying rent while funding your home construction project.
  • Established Neighbourhoods: Existing homes are often in already-established areas with must-have amenities and infrastructure, like schools and hospitals, providing a sense of community and convenience from day one. 
  • Details Unveiled: You know exactly what you’re getting with an existing home, including its condition and market value. That can help you decide whether you want or can afford a two or three-bedroom property in a certain area. 
  • Diverse Options: The market for existing homes is vast, offering a range of choices in different neighbourhoods. Since you don’t have location limitations, you can choose a house that truly suits your budget and needs. 

Cons of Buying a Home:

  • Limited Customisation: Existing homes may not have all the features you desire, leading to additional renovation costs.
  • Higher Stamp Duty: Since established properties have higher property values than vacant lots, stamp duty on existing homes is typically higher than on new builds.
  • Maintenance Costs: If you happen to buy an older home, it may require more maintenance and may not be as energy-efficient.

Is It More Expensive to Build or Buy a House?

While there are many factors you should consider when choosing between building a home or buying an established one, the biggest deciding factor will likely be cost. 

Building a home can be more cost-effective in some areas, but keep in mind that the total cost is influenced by land prices, construction costs and other factors.

On the other hand, buying an existing home may seem more expensive upfront, but it often includes the convenience of living in established neighbourhoods and immediate move-in. 

Making the Decision

Your choice between building and buying a home depends on various factors, including your budget, timeline, desired location and personal preferences. Beyond asking, “Is it cheaper to build or buy a house?” consider the following, too:

  • Do you value customisation and energy efficiency over immediate availability?
  • Is the location or the uniqueness of the home more important to you?
  • Do you need a home ready immediately, or can you afford the time and effort involved in building?
  • Are you prepared for the potential delays and challenges of building a home?
  • Are you eligible for a First-Home Owner Grant and stamp duty concessions in your state or territory if you choose to build or buy a home? 
  • What’s the long-term value of your choice? 

How About Buying Off the Plan? 

Buying off the plan means committing to a property that hasn’t been built yet. This option can be more affordable and flexible than buying an existing property. The purchase price is often lower, and you typically only pay a deposit initially, with the balance due upon completion. This gives you more time to save while the property is being built. There’s also the potential for capital growth during construction.

However, there are risks. Projects can be delayed or, in some cases, not proceed at all. Your financial situation and the property market can change during the construction period, impacting your ability to service the loan or resell the property. It’s crucial to research the developer, builder and financier involved in the project and to understand the contract thoroughly, including any sunset clauses.

Let Deltos Finance Help You Decide

Whether you decide to build or buy an established home or off the plan, each path to homeownership has its unique journey and rewards. Consider your long-term goals, financial situation and lifestyle needs when making this crucial decision. For expert guidance and personalised mortgage advice, contact us here at Deltos Finance. 

From first-home buyer loans to construction loans, our mortgage brokers in Hobart offer tailored solutions that align with your financial situation and home-buying goals. Let us help you decide and get you approved for the most suitable home loan.

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