New Build vs Buying an Establised Home

Choosing between building a new home in Newcastle or buying an established one in the Newcastle and Lake Macquarie region is emotionally and financially significant. With higher costs in the building sector, the wrong decision can leave you in financial ruin. Conversely, if you get it right, you can make a healthy profit, but there are risks involved. Or alternatively, do you go down the path of purchasing an established property, that is ready to go in the preferred suburbs of Newcastle?  

In this Insight article, we will explore the pros and cons of new construction homes and established homes in the Hunter, Newcastle and Lake Macquarie regions, shedding light on the role of a buyers agent in guiding prospective homeowners toward the right choice for their personal circumstances.

Pros and Cons of a New Build

There are many new estates and areas in the Newcastle and Lake Macquarie regions, with various opportunities to build a new home. Here are some of the pros and cons in considering a new home build.

Pros:

• Modern Amenities – New constructions often come equipped with the latest technology and energy-efficient features, offering homeowners a more contemporary living experience.
• Warranty and Guarantees – Builders typically provide warranties on new constructions, covering defects and structural issues and providing peace of mind for the homeowner.
• Customisation Options – Buyers can often personalise their homes during construction, tailoring the design and finishes to suit their preferences.

Cons:

• Higher Initial Cost – New home constructions tend to have a higher upfront cost compared to established homes, reflecting the expenses associated with land acquisition, development, and modern amenities.
• Lower Land-to-Building Ratio – You must pay more to construct a new home, which means the land-to-building ratio isn’t in your favour. Over time, the land increases in value, and the building depreciates. Typically, the higher the land value compared to the building value, the better your long-term capital growth prospects will be.
• Completion Delays – Construction projects may face unexpected delays due to weather, labour shortages, or other unforeseen circumstances, leading to potential frustration for homebuyers.
• Limited Established Infrastructure – New developments may lack mature infrastructure, such as schools, parks, and public transportation, impacting the overall convenience of the neighbourhood. Typically new developments are further from the CBD or coastlines, which could impact long term capital growth. 
• Cost to build – It will almost always cost more than you think. If you believe your new build will cost you $800,000, maybe add 10-20% contingency just to be safe.

Pros and Cons of Buying an Established Home

There are many beautiful established suburbs in the Newcastle and Lake Macquarie areas, and many have various price points and building variations. Here are some pros and cons of purchasing in an established location. 

Pros:

• Established Neighbourhoods – Resale homes are often in well-established neighbourhoods with amenities, mature trees, and quality schools and offer a sense of community. Typically these locations are closer to the CBD and coastlines. 
• Higher land-to-building ratio – If you buy an older established home that has already depreciated over time, a higher percentage of the dollar amount goes towards the actual land value. Over time, it’s proven that the land increases in value while the building depreciates.
• Negotiation Opportunities – Sellers of established homes may be more open to negotiation, depending on their motivation.
• Quicker Move-In – Unlike new constructions, most established homes are ready for immediate occupancy, allowing buyers to move in sooner.
• Renovating Increases Value – Established homes have the opportunity to add value to the overall property by doing renovations, extensions or adding creature comforts like pools.

Cons:

• Maintenance Costs – Older homes may require more maintenance and renovations, potentially leading to higher future costs for the homeowner.
• Outdated Features – Resale homes might have outdated features and appliances, requiring additional investment to modernise the living spaces.
• Hazardous Building Materials – Older homes can sometimes be built with a substance called asbestos. This building material can be dangerous if it enters your system. It can be costly if you need to remove it from your home. 

The Best of Both Worlds

You may even consider the idea of conducting a knock down and rebuild in an established area of Newcastle and Lake Macquarie. This option would give you not only a new home with all the features but would also allow you to live in an established location closer to the CBD (Newcastle East, Cooks Hill etc.) or the coastline (Merewether, Bar Beach etc.). Typically, this option would be more expensive as you would be purchasing an established property, but only gaining the value of the land. But, if this fits within your budget and you can achieve the home you need, this may be the best solution for you. 

The Role of a Buyer’s Agent in This Choice

In navigating the complexities of the real estate market in Newcastle and Lake Macquarie, engaging a buyer’s agent can be a game-changer. Here’s how:

• Understanding Your Needs – Buyer’s agents work closely with buyers to understand their specific needs and preferences, helping them choose between a new construction or an established home based on your individual priorities. Or possibly entertaining the option of a knockdown rebuild. This can easily be determined early in the journey based on your budget and location preference.
• Market Expertise – A buyer’s agent possesses in-depth knowledge of the local real estate market, helping home buyers make informed decisions based on current trends and future projections.
• Negotiation Skills – A skilled buyer’s agent can negotiate on behalf of the buyer, ensuring they secure the best possible deal in terms of price and contract terms.
• Streamlining the Process – Navigating the intricate home buying process can be overwhelming. A buyer’s agent simplifies the experience, providing guidance at every step to ensure a smooth transaction.

Therefore, if you are requiring some assistance in not only determining which is your best option but also with selecting the right property, Open Doors Buyers Agent is your local expert in the Newcastle and Lake Macquarie area. Contact us here.