While an established property in an established suburb is never a bad investment — older suburbs tend to be in higher demand and property values appreciate faster — there are more than a few reasons why the right new home could be a better investment.
Buying a new home offers homebuyers, whether they intend to reside in the property themselves or rent it out, the opportunity to buy a home, free of hidden costs later on — asbestos, bad plumbing.
New vs. off the plan
To be clear, when we talk about buying new, we mean buying houses or apartments that have already been constructed and not lived in. We are not talking about buying off the plan developments, which are a more risky.
Benefits of buying new
But in the purchase of a newly constructed home, there are a number of clear benefits, including:
- New building warranty: All new homes come with a statutory warranty that covers all major defects for six years and two years for other defects.
- New building standards and materials: Newly constructed homes are built to the most recent standards, using approved materials, and protecting you from finding hidden nasties after you move in (read: loose-fill asbestos insulation, etc).
- Fewer maintenance issues: For the first two to six years, you can expect far fewer maintenance issues, with the exception of accidental damage, breakages and other issues not covered by the new building warranty.
- Energy efficient: Depending on the house design and builder, of course, most new homes are more energy efficient, thanks to improvements in ceiling insulation, new energy efficient windows, and modern appliances.
- Higher depreciation: If the property is an investment, you can claim higher rates of depreciation on the property’s fittings and fixtures than you can an established property. Each fitting and fixture his depreciated at different rates and has different life expectancies, according to the ATO. You should consult your accountant to make sure you’re claiming the right amounts.
- Higher rental returns: New homes generally yield high rental incomes than older, established homes in the same location. In fact return from existing dwellings is determined by the price of new dwellings.
First home buyers are often better off buying a new home, as it gives them a far better chance at paying down their mortgage for a number of years, without any additional out-of-pocket expenses cropping up after they move in.