You have done your sums and you have the deposit, you're in the market for a new home. The big decision now is whether to purchase an existing property or build a new one from scratch.
You may already have your dream home in mind, it's just not quite in the location you want. Or you might have been traipsing through opens for inspection for months on end, only to come away with the feeling there is something not quite right with every home you entered.
Either way, before you jump in, there are a number of factors you will want to take into account when you decide between building or buying. These include whether the area and the site are right for you, how soon you want to be in your new home, whether you can afford the total outlay and how important is minimising your footprint on the planet.
When you purchase a pre-loved home, the likelihood is that it will be in an established area. You’ll be close to schools, public transport, shopping, restaurants and entertainment. The flip side is that - even with pre-purchase inspections - you may not know all the flaws in your new purchase until you've lived in it for some time.
The alternative to buying an existing property is to buy land and build a new home. Building a new home allows you to create a home that fits your needs. Plus, because the building must be constructed to the latest building codes, you can benefit from new standards such as environmental requirements that can help keep your energy costs down.
Empty blocks of land in existing suburbs are rare. Unless you are going to buy an existing property and demolish it to build your new home, it's likely that you will be buying land on a new land release or subdivision. Services like shopping centres, schools and public transport may exist, or they may only be planned for future release.
When selecting land, it's not just about location. The steepness of the block and access to it will impact on the cost of building, and nearby watercourses can affect the building design as well as the ongoing cost of insurance. If there are large trees on the block that you want to remove, you will probably require council permission. The presence of mains sewer or electricity lines on the land can also restrict your plans or increase the cost of building.
Aside from location, there are pros and cons to building versus buying, and you need to assess the time involved, cost and sustainability.
When buying a home that already exists, you put down your deposit and arrange for finance to be approved. There will usually be a
settlement time of about four to six weeks, and then the property is handed over. At this point you could move right in.
Building a new home is a little more complex.
According to the Australian Housing and Urban Research Institute (AHURI) it can take up to 7.5 months on average to construct a new home. This is nearly double the time it took in 2000, and the AHURI says this is due to the increased size and complexity of house designs, and a current skills shortage in the building industry .
One option to build a new home is to buy a house and land package from a developer or government land organisation.
Alternatively, if you buy vacant land on its own or knock down an existing property, you will need to either erect a project home, kit home or a custom designed building.
Project home providers offer a range of pre-made house designs - you'll save time on planning and the builder you eventually choose may be familiar with the design which may help reduce the cost of construction.
A kit home not only includes the plans but also the main components delivered to your building site.
The alternative to house and land, project and kit homes is a custom-designed building. Plans will need to be drawn up and the builder will need to familiarise themselves with the plans. This can add time and cost to the project.
When you are building, you will also need your local council's approval of your Development Application. If the neighbours object, this could delay the approval further.
When buying an existing home, you will incur the upfront costs of pre-purchase inspections to assess the home's potential. Experts can assess the property's environmental sustainability, look for faults such as structural cracks, estimate the cost of rectification , and check for termites and other pests.
After settlement, you'll need to pay stamp duty, although
you might be eligible for concessions if you are a first time buyer, depending on which state you live in.
Over time you'll have ongoing updating, repair and replacement costs, such as maintaining decks, repainting the interior and exterior, replacing ageing plumbing, electrical wiring and built-in appliances.
average cost in 2012 to build a new home was about $282,000.
If you purchase a home
off-the-plan from a developer, it typically costs less per square metre than a custom-designed and built house. The building time will also be shorter. The downside is that your design options and materials may be limited.
A significant reason to consider building a new home rather than purchasing an existing one is to ensure it is environmentally sustainable. The average Australian home produces seven tonnes of greenhouse gas emissions annually.
Passive design techniques can keep energy bills down and reduce emissions. This might mean orienting the home to take advantage of the climate - the sun, shade and cooling breezes - as well as integrating technologies like insulation and energy efficient glazing.