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brand new vs few years old - price

Discussion in 'The Buying & Selling Process' started by Oshawott, 5th Aug, 2015.

  1. Oshawott

    Oshawott Well-Known Member

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    hi,

    just wondering what your thoughts are regarding when a house can achieve its highest price;
    obviously everyone wants a brand new house and that will definitely fetch a bit more premium.

    question is how much more VS a house that is a few years old. i know its hard to be 100% spot on with figures, but would appreciate a general rule of thumb/ based on experience knowledge

    assume the following hypothetical scenario:
    1. Brand new house (used hard wearing materials) - lets say worth 650k today
    2. No capital growth for 4-5 years
    3. rented out for 4-5 years. but have minimal wear and tear at the end right before selling (maybe even fresh coat of paint if needed)

    using the above scenario, how much less can i get if i sell in future compared to if i sell it now?

    thanks.
     
  2. wylie

    wylie Moderator Staff Member

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    I was told that if we do our townhouse build and sell brand new, they will get a brand new, never lived in "premium". If we hold them and rent them, it would take about five years before they made up for the lost "premium" we would get if they were sold brand new.

    This is the Coorparoo market.
     
  3. Oshawott

    Oshawott Well-Known Member

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    thanks for replying wylie,

    what cg % are they assuming when they say it takes 5 years to recuperate the lost "premium" of brand new?
     
  4. wylie

    wylie Moderator Staff Member

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    I'm not sure a percentage was mentioned and if it was, I cannot remember it. This was a local agent. If you call an agent local to the area you are looking at, you may get an answer.
     
  5. Roosterman

    Roosterman Well-Known Member

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    Real life example just to back up what Wylie said.

    I bought a townhouse in Coorparoo in August 2014 for $565k.

    It was built in 2009 and sold for $585k then
     
  6. Oshawott

    Oshawott Well-Known Member

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    Thats quite a significant premium reduction just by renting it out.

    Not familiar with coorparoo, but had a quick look at annual growth, seems like median is higher in 2014 than in 2009.
     
  7. wylie

    wylie Moderator Staff Member

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    Prices crashed with the GFC. It has taken a while to come back and a house we sold last year still was at least $100K less than it was appraised pre GFC.
     
  8. hematite

    hematite Well-Known Member

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    This would purely depend on the suburb and state of the market. It's difficult to make this comparison unless the market has been flat whilst the property has been rented out.
     
  9. neK

    neK Well-Known Member

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    I haven't seen to be the case in Sydney.
    Is it because the "new" premium is based on marketing to overseas buyers who can only buy new?
     
  10. wylie

    wylie Moderator Staff Member

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    The agent simply said brand sparkling new, never lived in commands a premium. Once it is "old" it loses that premium and won't level up for about five years when it is then compared to other "couple of years old" properties. I am talking Coorparoo market, and Coorparoo agent, but I'd guess that would hold true for most suburbs? I think it is less about the suburb or market, and more about people paying more for something that is brand new.
     
  11. Big Will

    Big Will Well-Known Member

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    New houses should attain more price but at the same time will lose the value once moved in as it is no longer new.

    Houses depreciate just like cars as new material, better build quality and better technology and more affordable technology come out each year.

    Go back 10-20 years ago, to have an automatic roller door was the best thing since slice bread now if it isn't an automatic roller door (or gate) it is a negative.

    Same thing with dishwashers and air con, 10-20 years ago it was classified as a luxury, now you wouldn't dream of not putting one in.

    It is also rare you see a brick house not rendered these days again it is almost expected to be rendered.
     
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  12. Bitsmisin

    Bitsmisin Member

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    If you sell after the 5 year mark, doesn't the lack of GST help but also on the other hand, the buyer doesn't get the FHBG incentive. A lot of tax factors and depreciation in the equation too.
     
  13. hematite

    hematite Well-Known Member

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    Agreed. I think this is too hard a question to generalise on.

    Btw, not all new houses are rendered. Plenty look great without render...
     
  14. Joshwaaaa

    Joshwaaaa Well-Known Member

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    Doesnt make a difference in my area one the highest prices i have seen for a "new" build was lived in just under a year before sale. But new builds are few and far between around here.
     
  15. Chilliblue

    Chilliblue Well-Known Member

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    @neK In a hot market, new will be the first preference of most buyers and many do not notice there are no window furnishings or tv aerials until they move in.
     
  16. Big Will

    Big Will Well-Known Member

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    Didn't say they don't exist but if that is what you think okay also didn't say anything about houses looking bad without render (my house isn't).

    I was talking about how houses have improved and why a new house would attain a higher price until moved in as it becomes second hand along with the deprecation due to many factors some included in my post.
     
  17. Oshawott

    Oshawott Well-Known Member

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    Im unsure if the premium of new house immediately drops, just by having someone move in even half a year only. I mean almost everything would still look new, only thing that changed is someone [has used the] toilet or [the] kitchen bench.... I get that if stuff becomes dated it won't be a good as newer stuff.
     
    Last edited by a moderator: 13th Aug, 2015
  18. Big Will

    Big Will Well-Known Member

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    Six months of wear and tear compared to new never lived in, I would rather have new than the slightly used one for the same price, you can have the slightly older one if you want.

    However as most people would want the new property it attracts a higher price (supply vs demand).

    Same as a car 6 months only done 1,000km (hardly used) still attracts less price then then the same plated car that is new.