Is it Better to Build or Buy a House?
What Are the Options?
Whether you’re a first home buyer or a savvy investor, the question of whether it is better to build or buy a house will quickly become a strong factor in your decision making process. Both building and buying are very important paths that certainly come with huge, life-altering implications.
Whether you choose to build or buy, each choice has its own advantages - and it’s not always purely in relation to the dollar amount of the investment. Life goals, the age of the investor(s), location and the time one might have at their disposal all play a role in making the most savvy and prudent decisions.
Is it better to build or buy a house? Or are there other options? What are the implications? How does an investment decision today affect us tomorrow, or indeed for decades to come? How do decisions affect us differently, depending on our unique and personal life-scenarios? Let’s take a look at the pros and cons of building or buying and weigh up the implications of each path.
Is it Better to Build or Buy a House?
Ultimately, to decide if you should build or buy a house - if you’re purchasing a house exclusively to live in it or to settle down for the long term, it is a good idea to ensure that the house meets your needs; not just for the short term, but also looking into the future. A good way to make certain that the house you build or buy will be livable and comfortable well into the future is to start with a checklist.
Build or Buy Checklist - What Should be Included?
Purchasing a property is a huge investment, regardless of whether you’re buying an established home, a brand new house with all the latest features or even a ‘fixer upper’. There are a few fundamental things that should be on your checklist, regardless of your plans for the property.
- Public transport to the area.
- Access to public amenities.
- Nearby roads: Will peak hour traffic affect the area?
- Parkes, cafes and restaurants.
- What is the crime rate of the area?
- Is the area prone to floods or other naturally occurring problems?
It is always a good idea to research the area that you’re considering building or buying in, and not just the particular house and street. It’s all too frequent an occurrence that home buyers regret investing or buying in an area after finding out that the area isn’t what it was cracked up to be - according to what they were told.
Don’t take anyone's word for it - at the end of the day, if there are any problems or concerning factors associated with an area, such as noise, crime, flooding or traffic that make it less than desirable, you will find this out by doing your own research and asking questions.
Is It Cheaper to Buy or Build a House?
Typically, on the surface, it is often cheaper, initially, to purchase an established property than it is to build from scratch. There are many factors that can come into play that can flip this basic truth - but if you're on a strict budget it can definitely pay to purchase a house that may need a bit of renovation or restoration - in the short term, anyway.
In the long term, renovations can actually wind up costing more than it would have to simply buy a brand new house off a plan - and with a lot less hassle. So whether it is cheaper to buy or build a house is relative to how you look at the investment as a whole.
Buying a house that needs a bit of work might get your foot in the door and free you from paying rent, which we all know is dead money. Even though it may cost you more to fix a property in the long run, that cost is offset by the fact that you got out of the dead-money rental spiral.
On the other hand, purchasing a brand new house right off the bat can save you a lot of time. Instead of spending your free time fixing a house for years, you can concentrate on bigger and better things, such as running a business.
To answer the question: “Is It Cheaper to Buy or Build a House?” - is not straight forward. There’s no right or wrong or hard and fast answer. It really does depend on a lot of factors, such as how much money or free time you have, or are willing to invest.
Your personality, lifestyle and personal preferences also come into play. Some people will love the idea of renovating, while others couldn't think of a worse way to spend their time and would much prefer a custom built house that’s ready to cater to their lifestyle.
Another factor that will come into play when deciding whether it is cheaper to buy or build a house is the current price of materials and labour. We all know things are getting more expensive. Established homes are almost always more affordable than newly built homes, for basically the same thing - except older, and arguably less trendy. This price discrepancy is exacerbated by soaring prices of materials.
Is It Cheaper to Buy Land and Build a House?
Similar to the question: “Is It Cheaper to Buy or Build a House?”, the question of: “Is It Cheaper to Buy Land and Build a House?” hugely depends on the cost of materials and labour, which have dramatically increased in recent years. Additionally, there are huge differences in the prices of land, depending on where you intend on building. This is a world-wide phenomenon.
Consider these factors when considering whether to purchase land and build:
- What are the land prices in the area where you’d like to build?
- Are there other areas that tick all the same boxes, except with cheaper land?
- If you intend on building in a rural area, consider:
- There will be additional transport costs associated with distance.
- Builders and tradesmen will charge more.
- There may be delays and waiting periods to have work done.
- Builders and tradesmen may not consider your project a priority.
- If you intend on building close to a city, consider:
- It might actually be more cost effective to buy an established property and add a house extension.
- Land prices escalate dramatically the closer you get to a city.
- If you intend on building in the suburbs, consider:
- The crime rate in some suburbs may drive land prices down. ie: It may be the very reason ‘the deal is so good’.
- How old is the suburb? New suburbs tend to be filled with younger families. The demographic of older suburbs tends to be made up with more middle aged people and retirees. Who do you want your new friends/neighbours to be?
When making a decision between buying land and building a house, there are many more factors to consider about land prices than the actual dollar amount of the land itself. Make a list of the various factors that you can foresee will affect your decision making process. When considering purchasing land, keep this list in mind. You may very well decide that it will be better to buy an existing house once you’ve thoroughly weighed up the options. If you're looking to get the most out of your money, many companies offer land and house packages Brisbane (in other locations too) which are great if you're wanting to deal with just one company for the whole process. Not only is this more cost-effective but also highly convenient too.
What to Consider When Building Your First Home
Building your first home can be a wonderful and joyous chapter of your life. A time to imagine the possibilities and bring big ideas to reality. However, without proper planning, building a new home can become an incredibly costly or even very stressful experience.
It is absolutely imperative to conduct a lot of research and ask endless questions before getting into any contracts or taking any other drastic, irreversible actions. Most players in the new home industry are absolute professionals that will generally have your best interest at heart, but keep in mind that they’re also running a business. At the end of the day they have bottom lines and need to make sales or otherwise get deals done. They may very well play down or conveniently ignore some of your concerns to ‘seal the deal’.
Unfortunately there are also some unscrupulous characters in the new home and building industries that will be more than happy to take your money off you if you’re naive. Before you part with your hard earned money or get hooked into a contract that can affect you for decades, you should create a checklist for building a new home.
It is important that you thoroughly weigh up all the options, but it’s even more important to make sure you understand what those options are and the implications of your decisions relating to buying a house, along with any contractual agreements or obligations.
Is it Better to Build or Buy a First Home?
To answer the question of whether to build or buy a first home, it is important to consider how your first home will play a role in your life. What’s the extended purpose of the home? Will it be a stepping stone into a better property in future? Is the purchase a means to an end? ie: To get out of rent? Or are you simply looking to invest while simultaneously getting out of the rental market?
The question of whether it’s better to build or buy a first home is truly relative, depending on what your answer to the above questions are. If the question is purely in relation to the dollar amount of purchasing a home, then the general rule of thumb is that established homes are usually more affordable to get into, but they can cost more in the long run.
A new home will cost a lot more in this day and age, but will generally provide a more comfortable, hassle free and cost effective life thereafter. You’ll find modern design attributes such as wall to ceiling windows, modern kitchens and skylights will be the norm.
In Conclusion: Buying Vs Building - What Are the Pros and Cons?
Keeping in tune with the theme of this article, there’s no hard and fast rule to determine if it’s better to build or buy a house. The better question is: “What are the factors to take into account that will help me to determine whether it’s better to build or buy a house?”.
- Pros of Building a Home: Building a home can be very rewarding, because you can design it in a way that brings your dreams to life. A new home will typically need less maintenance and will allow you to enjoy a hassle free, comfortable and luxurious life.
- Cons of Building a Home: Building a home can cost a lot more than buying an established home - especially taking today’s soaring prices for materials and labour into account.
- Pros of Buying a Home: Purchasing an established home is generally more affordable in the short term, but may require additional work and maintenance. It is very important to ensure proper inspections are carried out before purchasing an established home.
- Cons of Buying a Home: Purchasing an established home can result in ongoing maintenance and costs in order to bring the house back to a reasonable condition. Even if the house is fine, the paint is ’that’ much closer to needing to be redone - various washers, valves and fittings will also be closer to needing replacement.
The best advice you can walk away with from reading this article is to make a list of what you need or require. Then research every point on that list thoroughly. As you research, your list will inevitably grow. Ask a lot of questions. Never make any decisions unless you feel confident that you’re fully versed and educated about the full array of options.
Building a house, buying land, purchasing a house, renovating - or even selling, are all very rewarding but also potentially costly propositions. All have the potential to fill your life with joy - or problems! Educate yourself. Research. Ask questions. Know what you want. If you follow these steps, you’ll be in a great position to enjoy your investment for many years to come, regardless of whether you ultimately decide to build or buy a house.