What Does a Price Guide Really Mean When You Inquire About a Property?
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October 16, 2024
Established Home vs. New Build: The Advantages and Disadvantages
Existing Home or New Build: What Should You Consider When Deciding? Is it Simply Personal Preference or Are There Other Factors Involved?
The reality is, it’s a mix of both. Let’s explore the advantages and disadvantages of each option to help you determine the best path forward.
Buying an Established Home
Here are some advantages and disadvantages of purchasing an established property:
Pros:
- Higher land value: Established homes often have a better land-to-asset ratio. Since land generally appreciates over time while the house itself may depreciate, the potential for capital growth can be greater.
- Value-add opportunities: If you enjoy DIY projects, established homes typically offer more opportunities to add value through renovations and improvements.
- Resale history: Established properties come with a record of past sales, making it easier to track property value trends over time.
- Existing infrastructure: Features, like established gardens, sheds, tanks, and fencing, can add value, as well as proximity to amenities like pools, schools, parks, and shops in well-developed suburbs.
Cons:
- Livability and personal preferences: If you prefer modern comforts, living in an older home may not suit your tastes. It’s essential to consider your preferences when making a decision.
- Maintenance and repair costs: One downside of buying an established home is that you may face higher maintenance and repair expenses, particularly in the short to medium term.
- Lower rental yields: If you’re planning to rent out the property, older homes might attract fewer tenants and offer lower rental returns compared to newer properties.
Buying a New Home
How do brand-new homes measure up? Let’s take a closer look.
Pros:
- Government incentives: Depending on your state, you could save on stamp duty, as it’s typically only payable on the land value with new house and land packages.
- Tax benefits for investors: New or off-the-plan properties may offer attractive tax benefits for investors, with potential depreciation claims on costs like furnishings.
- Lower maintenance costs: New homes usually come with fewer ongoing maintenance and repair expenses.
- Rental returns: Newer homes with modern interiors often attract more tenants, potentially leading to higher rental returns.
Cons:
- Affordability: In some states, new homes and units can be pricier than similar-sized established homes, making budget a key factor.
- Lower land-to-asset ratio: New properties might offer less capital growth potential due to the typically lower land-to-asset ratio.
- Limited infrastructure: New homes and land packages may lack established infrastructure, both on the property and within the surrounding community, especially in new housing estates.
- Higher risk: With no history of resale or capital growth, investing in new properties might carry more risk.
- Less potential for value-adding: New homes may offer limited opportunities for renovations or improvements, so if you’re interested in DIY projects, a new property may not be ideal.
Prepared to research your home loan?
Now that you have a clearer understanding of how new and established homes compare, it’s the perfect time to start researching home loan options.
Take a look at some excellent home loan choices here, or if you need additional support, consider reaching out to a Lending Specialist to help you evaluate your options.
If you’re ready to take the next step in your home-buying journey, the team at Ash Buyers Agency is here to help. As experienced buyer agents in Sydney, we can guide you through the process, ensuring you make informed decisions tailored to your needs. For assistance, feel free to contact us at +61 434 111 200 or email us at info@AshBuyersAgency.com.au Let us help you find the perfect property for your lifestyle and investment goals!
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