As housing unaffordability continue to plague home buyers in Sydney and Melbourne, Finder.com.au money expert Bessie Hassan believes that homebuyers will be able to save thousands of dollars if they consider building a new home instead of buying one.
Taking into account median prices, stamp duty, grants available, and build costs, an analysis of property costs showed that the cost of building a new home would be $360,000 cheaper in Sydney and $200,000 cheaper in Melbourne. In fact, construction costs appear to be higher in Brisbane and Perth.
However, Wakelin Property Advisory associate director Jarrod McCabe warns homebuyers and investors from getting "too excited by this strategy."
"The main reason to be wary of this approach is availability. It is very hard to find vacant land in established suburbs and you'll most likely find yourself travelling towards our cities' fringes in order to find any," he said. "Once you come closer to the city, land values are generally too high to make the economics work unless you're an experienced builder or developer."
Established houses are often located in areas with amenities while new houses are typically not. Sydneysiders need to look further from the CBD for vacant land options, as blocks of land in Sydney's Box Hill are typically priced from $390,000 for 300 square metres.
Land also soared in value during the property boom, jumping $100,000 in the past 12 months in Sydney according to the Urban Development Industry Australia's (UDIA) 2016 State of the Land report. Taxes are also high, as "the most taxed product in Australia is a new home or apartment," said UDIA national president Michael Corcoran.
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