Why established over new build? PPoR

Hi All,
So the general consensus on here is it is better to buy established over buying land and building in terms of cg. I acknowledge the fact that typically you are paying the majority of the asking price for the land when buying established and only a small portion for the house itself but what others factors contribute to the argument established is better than new build?
Also, how likely do people feel that purchasing land & building will give you an end product worth more than your costs? ( If done right and thorough budgets created at the start )
I am not looking at house and land packages in outer Perth suburbs I am looking within 20km of the cbd buying say a rear block that has become available behind an existing premises and building on that. This would entitle me to more in the way of grants such as the fhog of 10k also lower/no stamp duty. If I buy existing for over 530k I will be paying significant stamp duty whereas any land I would purchase would be under the 430k threshold so I will end up with a property worth over 530k that I paid zero stamp duty on ( please correct me if I am wrong on the stamp duty rules )
Id love to her peoples opinions/suggestions/pros-cons arguments
I am not leaning specifically towards either strategy at the moment and am staying open minded

 

Any experienced investors to comment?

 

Arguments for new:
a) If investing then only new property will qualify for the depreciation allowance on plant and equipment.
b) At the moment you can still claim interest on costs borrowed for while constructing.
c) Lower stamp duty
d) you can design to suit your needs

Arguments against:
a) if new area there may be many new properties which may make it harder to rent and lower rents
b) heaps of problems may appear which need fixing
c) landscaping costs mostly not deductible
d) delay between incurring costs and renting
e) more complex to work out CGT

etc

 

The general bias is against cookie-cutter H&L packages on small blocks in outer suburbs where there is little prospect of capital growth and the developer pockets the highest possible profit.

Where you can do very well is in knock-down rebuilds in desired suburbs, particularly for a PPOR which you live in for some time.

Or buying vacant land and arranging the build yourself.

We bought vacant land and built our first house. Sold after four years at double the cost to us. And yes, it was in an outer suburb.
Marg

 

Houses built in 70's or earlier generally have a higher quality of workmanship.

In boom periods, when houses need to built quickly, quality is compromised due to the need to get more workers onsite to finish the job quicker.

 

The good thing about established properties is that the area hopefully has good existing amenities. The good with new properties is that if you use a reputable builder you can build the property to your design (though checking on the build is work); you can buy in a new area which may be more desirable; the building should be built to current higher standards including energy efficiency.

All things being equal, if the location is excellent, then I would certainly consider new in the mix. Just make sure you are sufficiently covered in terms of insurance and finance if you decide to build.

You can always pay for someone to do your landscaping if you want a new home to look established. The important thing with a new build is to not over pay for land and regularly check out the building site and communicate with the builder if you are unhappy with anything. Communication and time are critical investments in new builds and they are highly stressful at times.

 

A new house has the most deprecation happening in the first 5 years (same as a car) however being a PPoR you cannot claim this as a loss (even though it has lost value). So you are relying on the lane value to exceed the depreciation. This is a hard task for a property to achieve especially in H&L areas.

Where as the established property usually is a bit older so not as bad with depreciation and the % of land content for purchase price is higher making the gains easier.

Another issue with new is you don’t know exactly what is being bought where as established you can see exactly what issues there could be.

Like a new car, a new house can be more of a lifestyle choice but still an investment.