Buy an existing home or build, is one cheaper in the current market?

If you’re looking to buy or build in Bundaberg or beyond, you’re probably asking yourself ‘should I build, or should I buy’? This is an age-old question in the housing industry, but is particularly prominent in the current climate, where the cost of living is on the rise. So, is it cheaper to buy an existing home or build a new house in the current market? While there are pros and cons to both, the short answer is that it’s likely cheaper to build. Here’s why. 

The current housing market

In the wake of Covid-19, housing prices in Australia are at an all-time high, making it difficult for first-time home buyers to break into the market. There’s no doubt that the costs for both buying a house and building a new house have ballooned over the last few years, which coupled with high interest rates may make buying or building a home seem like an impossibility. 

However, there is still hope. While there’s no hard and fast rule that building will be cheaper than buying, trends do suggest that building is usually the more affordable option. According to 2021 statistics, building a house in Brisbane could save you $50,000 or more, compared to buying a similar existing home. While construction costs rose by 20% in the 2021-22 financial year, the rising costs of existing homes still mean that building is generally cheaper than purchasing an established house. 

Supply chain issues for building houses

Like many industries, construction was hit hard during Covid-19, with issues in the supply chain not only slowing down construction times, but demand also hiking up the price of building materials. This has caused many commentators to suggest that building isn’t a feasible option for the average Australian. However, with 80% of First Home Buyers buying a house they intend to renovate, supply chain issues in the building industry are also affecting those buying existing houses. 

In 2023, we’re seeing these issues resolved, with timber and other materials becoming more readily available, thus reducing the costs. The Housing Industry Association also predicts that construction costs more generally will begin to stabilise this year and into 2024. There are still some issues with labour availability, as international workers have been unable to enter the country during the pandemic, resulting in a labour shortage that is still affecting the industry. However, builders are slowly getting back on track, so looking into building now is a good idea before places are filled up. 

Won’t building costs decrease soon?

While supply chain issues are beginning to resolve, and prices are stabilising, this doesn’t mean that the cost to build is going to decrease drastically. In fact, the cost of building a house is still set to rise across 2023-2024 - just much less than in previous years. What could decrease is the price of land, although nothing is for certain. 

The best thing you can do if you’re looking to build a house in 2023 is to engage a trusted Bundaberg home builder who is upfront about their costs and timeframes. Waiting to build or buy a home until the housing market ‘crashes’ just isn’t feasible.

The pros and cons of building vs buying

Looking at the state of things, it may still be hard to decide whether to buy or build. There certainly are benefits to buying an existing home - you’ll generally know what you’re getting ahead of time, the process is quicker, and there are no unexpected costs or budget blowouts. However, there are also downfalls to buying an existing home, including financial drawbacks such as:

• The need to renovate, either before moving in, or to resolve ‘old house problems’
• Changing cosmetic fixtures and finishes to fit your aesthetic
• Higher government fees and reduced grants available when buying an existing home

In contrast, there are also pros and cons to building a new home. On the negative side, there can be excess costs that are incurred when changes are made to the plan or optional extras you didn’t account for. You also have some uncertainties with build times, especially when things such as weather or labour shortages are outside of your builder’s control. 

However, the good thing about building a new home is that you have more control in other financial aspects. Many first-time homeowner grants and government concessions are only available when you build a new house, rather than purchasing an existing dwelling. There’s also no need to spend extra on renovations or changing decor - you get to choose how your house will look from the get-go. 

2023 is still a good time to build a new home

While there are still uncertainties in the building industry, 2023 is still a good time to build a new home. Whether you’re an investor or are looking to build a family home, building a house can still be affordable and cost-effective if you do it right. If you’d like to know more about the costs involved in building a house in Bundaberg in 2023, get in touch with our Bundaberg home builder team to set up a consultation.