New Versus Old Homes

Source: Bas Van Uyen via Flickr

As the price of land in Melbourne rises to new heights, the gap between new and established houses is narrowing. When choosing between newly built or established homes there are a number of factors for buyers to consider if they wish to maximise on capital growth, return rate and marketability.

New dwellings offer buyers substantial stamp duty savings if purchased off the plan. For investors, they also represent a greater prospect for tax depreciation benefits. Newer homes are also often located in fringe areas where there is a greater supply of affordable land.

Initially, however, new dwellings may not have the same capital growth rate potential as some established properties. This is because established homes tend to be situated in more developed areas with communities, complex infrastructure and public amenities which aid marketability. Many newer homes also adhere to fairly homogenous designs which lack the sought after features of established properties.

A useful tip when buying, regardless of a property’s age, is to be wary of prices that are well above the suburb’s median price. Careful analysis of the area and in particular the street will ensure that buyers avoid the risk of overcapitalising on a property. Nevertheless, there is a fine balance between overpaying for a property and not owning a property at all. Market forces have a way of determining price, the auction process being a transparent example.

Property buyers must research and consider employing a certified practicing valuer to help them determine fair market value.