Jump to content

Melbourne: Buying vs Building a Home


Mara

Recommended Posts

To compare building to buying, is like six of the one and a half a dozen of the other.

Buying:

  • You walk in, you check it all out
  • You decide you like it
  • The gardens are good and you are happy with the place
  • You make an offer on condition that a building/surveyor report (that you pay for) has a positive result
  • You will be paying stamp duty on the price of the property
  • In Australia the money changes hands on the day that the sale officially goes through.. registration will happen at some later date.
  • It is highly unlikely that you can move into the property before the official sale date, have never heard of that happening here.
  • Official sale dates usually take place on a Friday, in Victoria.
  • Your mortgage (loan) starts with effect from the official sale date.

Stamp Duty on an existing property: http://www.sro.vic.g...ansfer?OpenForm
For this exercise, we will presume that the purchase price is $500,000. As a first time home buyer in Australia you will be paying approximately $10,985-00 and if you are not a first time home buyer it will be approximately $21,970-00. This would be over and above the price you are paying for the property.

Building:

  • You go and view show homes, until you find a builder whose home you like.
  • When you see the show home, please remember it is just full of upgrade, this is not what you will get. Ask the consultant for the price of the show home as it stands.
  • You may well find that the show home has had $100,000 upgrades done to it.
  • If you are on a budget, forget about major changes, you need to find a plan with which you are 90% happy and accept the 10% you are not happy with.
  • In general you cannot move wet areas, and small changes would not cost the earth.
  • To give you an idea, we changed all the windows in our home from sliding windows to awning windows, the cost of the upgrade was around $2000.
  • You sign the contract for the house and land package
  • The builder will give you a completion date
  • In general, most builders include floor coverings, but there will be tiles only to the wet areas and the carpets or timber floors will be run of the mill, you will have to pay for an upgrade if you want something fancier.
  • Light fittings are not generally included in the price quoted, there will only be a globe on a light fixture in the ceiling, the rest is up to you. If you want them to fit the light fittings you have purchased, it will be extra.
  • In general, driveways and landscaping is for your own account, the builders do not pay for them. They do sometimes have specials where the driveway and front landscaping is included. Believe me, the landscaping will be minimal and usually you will not have a say in what is done, except for choosing the colour of the the driveway.
  • Kitchens, bathrooms, toilets, are fitted out, you can pay for upgrades on the appliances if you do not like the ones that they have included.
  • There are two systems forward (a) you pay your deposit and pay nothing else until the official occupation day. ( B) you pay your deposit and then draw down on your mortgage as the building reaches various stages. This means that you will be paying rent elsewhere and mortgage payments as the building is built. You will only pay mortgage rates on the amount drawn down, not on the whole amount.

Stamp Duty on an land only property: http://www.sro.vic.g...ansfer?OpenForm
For this exercise, we will presume that the purchase price is $150,000. As a first time home buyer in Australia you will be paying approximately $1,935-00 and if you are not a first time home buyer it will be approximately $3,870-00. This would be over and above the price you are paying for the property.

Of course the other item I have to stress, is that for the $500,000 quoted for the existing home, if you pay $150,000 for your land to build, the home may cost you around $200,000 which then amounts to $350,000 which is quite a cost saving. You will often get much more house for your money in building than in buying. So a big question mark in the calculation would be the cost of the land... it is pretty pricey, in most parts of Melbourne.

For myself, I prefer to build, which we have done twice. I can see it going up, I know what I am getting, I can have it as close to the perfect layout that I can afford.

This is just my opinion, I am sure there are many that will have a differing view.

  • Like 2
Link to comment
Share on other sites

Hi Mara, thanks this is very interesting. When building, do you know if you pay GST on the new house?

Link to comment
Share on other sites

Yes, and what about grants? Especially for first time builders or homeowners

Link to comment
Share on other sites

This information is so valuable, thank you Mara. Printing it out right now! Pietnaude, we were told that the 1st buyer's grant is $10 000.

Link to comment
Share on other sites

Rhyss the answer is yes, however, as it is included in the price you pay to the builder, I guess we never even thought of that!

Link to comment
Share on other sites

Great post Mara.

We found that all things considered, if it's a purely financial decision, then buying mostly works out cheaper than building these days - because land prices have risen a lot. But it is really good to build a house to your own tastes and watch the progress as it goes up.

There are a lot of hidden costs when building. They will build your house to the stage where you can live in it, but then there is the extras that add up. Toilet roll holders, towel racks. Insect screens. An outdoor entertainment area if you haven't got one included. Paving. Garden paths, and of course, the big one - landscaping. Garden gates, water tanks, motors on garage doors, TV aerial, phone connection, blinds and curtains, locks on the windows, shelving .... all stuff that costs money and that an established house often already has when you buy it.

One tip that I would suggest when building is - the light fittings and power points that are included in the build price are often never enough. It pays to add more when you build (At extra cost) than having to retro-fit later. We put an extra power point in each room and a few more in the kitchen than they already had.

Another thing - carpets. As mentioned, cheap carpets are cheap. They don't last. We chose upgraded ones and they were still not great - I would fork out the extra money and go for top of the range of possible. It's amazing how different a good carpet reacts to stains than a cheap one.

Link to comment
Share on other sites

Depends where you buy a built house vs where you buy land.

Our house in Eynesbury would go for more than double (tripple?) if in the inner SE.

We got to modify our house to suite our needs and desires. Plus we know that there isn't mould somewhere that's just been painted over. Or rotting frames...or hidden termites...

-G

Link to comment
Share on other sites

Depends where you buy a built house vs where you buy land.

Our house in Eynesbury would go for more than double (tripple?) if in the inner SE.

-G

You could only ever compare buying vs building in the same suburb to be comparing apples with apples.

Man, we would have loved to pick up our house that we built in Pakenham and planted it in Greensborough.

  • Like 1
Link to comment
Share on other sites

I am in agreement with Hansa above, you need to compare apples to apples, being 50klms out of Melbourne cannot be compared to the inner South East.

My advice was actually given as an example, that is why I gave the link for the stamp duty, that way you can work out your own situation.

Land is the big cost factor in the situation where you are building!

The house price will remain much of a muchness, depending of course on the foundations, if you are on a heavily sloping block, it could cost you a bit more.

A double storey will cost more to build than a single storey.

For us, in both the homes we built, even after all the things we added ($50,000), including driveways, and most of the landscaping, a three car shed, over and above the double garage, IF we had bought a finished home in the same area, it would have cost us around $100,000 more.

Then, we are very fortunate, there is nothing that hubby cannot turn his hand to...

  • Like 1
Link to comment
Share on other sites

  • 2 months later...

I like that this is now a pinned post. ;)

  • Like 1
Link to comment
Share on other sites

I may add a little interest to this post. Hubby works 73klms one way, from home, down in the South East. We have considered either letting our present home and renting closer to his work, or, selling in Sunbury and purchasing land to rebuild closer to Braeside. We can buy a 450 square metre block of land in Keysborough for around $350,000 to $420,000, in Sunbury you would pay around $180,000 for the same size piece of land, or even slightly bigger. This would give you some idea. As I said before, the house build itself, would be about the same, regardless of which suburb you build in.

Link to comment
Share on other sites

Hehehe..at least by now you know which plans to go for and what to change. I wonder if the same company would build for you again? :P
We had friends look at the house we were interested in, and decided to just wait until we live in Aus, and then we'll buy land and build as soon as we can get a loan.

Link to comment
Share on other sites

Hehe, I guess they would run a mile. I have my eye on another one, should we go down that route.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
×
  • Create New...