Advice matters
Build a new home or buy an existing one?

Build new or buy existing? If you’re pondering your next property move, this question has probably crossed your mind at least once. And the answer may not be as straightforward as you’d expect.

Here are some key considerations to think through.

Why build new?

Building new comes with important benefits, the first of which is customisation. By designing your own house or personalising the layout of an off-the-plan property, you have control over all the details. Depending on your budget, you can tailor your home to your needs and wants without having to settle for less.

Also, you can choose the quality of your finishings, from energy-efficient building materials through to high-end features like timber flooring or granite counters.

Energy efficiency is one of the key advantages of building new over retrofitting or renovating an existing home. Think double-glazing, central heating, brand-new insulation… Of course, some things can be retrofitted onto an existing property, but that might cost you more and, in some cases, it may not even be possible due to an outdated layout (e.g. not enough roof space to install central heating). Plus, keep in mind that a quality new build may mean little to no repair costs for a few years.

Last, but not least, if your new build is your first home, and you meet the qualifying criteria, you may be eligible for a bigger KiwiSaver First Home grant. Depending on how long they have been contributing at least the minimum required contribution, first-home buyers purchasing a new home or land to build on can get up to $10,000 to put towards the deposit, compared to up to $5,000 if they buy an existing property.

Keep in mind, however, that there are certain criteria to meet, including region-specific house price caps. Click here to check if you’re eligible.

Risks and costs of building new

Besides the advantages we just reviewed, keep in mind that there can be risks and drawbacks to building a new home.

One of the main cons is the build time. Depending on the type of build and developer involved, building a house from scratch can take several months. In case of subdivisions, developers often wait for pre-sales to get dirt moving, and in the meantime, off-the-plan buyers continue to spend money on rent.  

Unexpected building costs may also arise. When it comes to new construction, additional excavation costs and rising prices of construction materials can quickly add up, so it’s important to budget for contingencies.

Why buy an existing home?

Buying an existing home can often be simpler than building from scratch.

One of the key advantages is that you get to see the house before making a decision and putting down a deposit. A building report can also give you extra peace of mind, by identifying any hidden damage or construction defects that might go unnoticed to an untrained eye.

If time is tight, or you just don’t want to spend more than necessary on rent, the possession timeframe is normally shorter than the average build time of a new home. Depending on your sale-and-purchase agreement, you may need to wait between a few weeks and a couple of months for the settlement date to roll around. In other words, you can move in right away, without having to wait for construction to be complete.

Finally, character is another crucial consideration when choosing between new and old. Newer homes are often more modern and practical, but may lack the personality and features of an older home. The final choice, of course, entirely depends on your taste and needs.

What are the downsides to buying an existing home?

As we said, one of the benefits of building new is that you can tailor the home to your needs and wants. There might not be a property in the market that ticks all the boxes for you, so you’ll likely need to compromise on something.

Before starting your house hunt, it’s a good idea to make a list of your ‘must-haves’ and ‘nice-to-haves’, so you can get a clearer picture of what’s available, what’s not, and what could potentially be added down the track.

Another key thing to consider is the potential for higher repair and replacement costs. An outdated kitchen, no heating system or an old roof can lead to expensive repair, upgrade or renovation expenses in the future.

Like to discuss your mortgage needs?

Build new or buy existing? Depending on where the property is located, this can literally be a million-dollar question. And the answer entirely depends on your circumstances and the market you’re buying in.

If you’re looking for a mortgage, please get in touch with a SHARE mortgage adviser: we can help you look at your options and understand the next steps.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.