Hi, just wanting to see which type of property to buy- is it better to buy newer constructed homes vs older constructed homes (say around 25 years old)? I’ve read about some newer homes having issues or built by dodgy builders, whereas older homes seem more solidly constructed? What are your thoughts? I’m looking mainly to buy a brick/stone home. Thanks
It is a weird market at the moment. Normally I would say it was better to buy new. But at the market I have been buying there is disparity, and for the same money you can buy magnificent, large ,unique old houses @ about half the cost they would cost to build and for about the same price as boring new ones cost in worse location. New have increased substantially while old hasnt.
What's your reasoning behind that? Do you have any data to back that up? I'm not staying you're wrong, but I'm definitely not getting that feeling.
the old rule of the building not being worth more than 1/3 of the total price has served me well. This is for investment of course. If you like living in something new with 4 bedrooms with 4 ensuites then that is cool as well
It really depends on how much you are prepared to compromise if you are going to live in the house. I'm fairly picky about many things with good orientation being high on the list. 20-30 years ago it seemed to me that the majority of houses were built: with no regard for orientation; large windows looking at fences; nowhere near enough power outlets; inadequate insulation; lack of quiet spaces with over the top open plan designs. That's the main reason I have had three new houses built over the journey. Having said that I have found a new house isn't always a great investment if you are building on a new subdivision as my experience has been it takes quite a few years before you can get a price gain on selling.
What is your intention for purchasing? If you are looking for an investment, historically established properties have outperformed (in capital growth terms) compared to new builds. Why? When purchasing a new property the majority of the purchase price is derived from the construction of the dwelling. This includes the labor, materials, and the builder's profit margin which add an additional premium to the purchase price. In addition, the dwelling of a property is a depreciating "asset" hence why you can claim tax deductions against a property. Moreover, new builds are usually located in estates that don't have the same level of demand as a well-located established property. Even when demand rises, an increase in supply (from more new builds) in new estates suppresses price growth. Hence why you see so many new builds flat lines for a period of time. Established properties on the other hand have a greater land-to-asset ratio. Meaning you are inherently buying more "asset" from the purchase price. In addition, you are more likely to find established properties with higher demand due to their locality. This is why you may see so many people on the forum recommend established over new. (Please note, you are able to make money from buying new but you generally need to buy under-valued land or own a construction company) I hope this helps.
