Many home buyers are confused when they are about to invest in real estate. The most difficult decision for home buyers is whether to buy an existing home or build a home themselves from scratch.
Both options have benefits and drawbacks, and the final decision comes down to the homebuyer’s budget, requirements, and personal preferences. But, is it cheaper to build or buy in 2024?
If you’re going to compare building and buying a home in 2024, there’s a lot that you’ll have to consider. According to the Australian Bureau of Statistics, building approvals increased by 1.3% in March 2022, which was the highest after COVID restrictions were lifted.
So, if you’re looking for a real estate property and thinking if is it cheaper to build or buy in 2024, you’re in the right place. In this post, we’ve discussed the arguments for both, which you can read and make your final decision.
Building vs buying a home in 2024
Building a home means you purchase land and then build a house on it. You can construct it independently and build it the way you want. Plus, you will be the first owner of the home and the first person living in a newly built house.
On the other hand, buying an existing house means you purchase an already constructed house. There are chances that people might have lived here before you, and it might have had several owners.
There are pros and cons of building or buying an existing property in 2024, which we’ll explain in this post. The following is a comparison of the costs of building and buying in 2024:
Cost of building a home
The cost of building your own house includes two main costs:
- Cost of purchasing land
- Construction costs
The first step is to estimate the cost of land. The total land price includes various other costs. For instance, the home buyer has to pay stamp duty. Besides that, other fees include land tax, property inspection fees, legal fees, agent fees, and other minor costs.
The price per square meter of land is highest in Sydney and lowest in Adelaide. The construction costs are the same throughout the cities, costing around $1,631 per square meter of land. So, if we calculate the costs of building a house in the capital city with a rough estimate, it will be as follows:
Sydney: Total land price + Total construction cost
= $494,741.50 + $362,897
= $858,132.5
If a home buyer doesn’t have this amount to construct their own house, they can consider getting a construction loan. A construction loan provides a good financing option and provides funds according to the building process.
Cost of buying a home
The cost of buying an established house in Sydney is $1,160,000. You can seek professional advice from a local representative or a real estate agent who can guide you with several home purchasing options.
A home loan is useful as it provides funds to purchase a home, and then the home buyer can repay the loan in instalments to the lender.
Building vs. buying: comparison of costs
As you see, there is a big difference in the costs of building a house versus buying a home in Sydney and in other capital cities. The same is for every city; buying land and then constructing your own home is cheaper than buying an existing home.
There is only one city, Perth, where the cost of buying could be less than the cost of building a house.
The costs of building or buying an established property also vary according to the real estate property’s location, skilled labor availability, and a good house and land package. But, as a general rule, the above comparison shows that the cost of building or buying an existing home greatly differs.
Advantages and disadvantages of building a home
Advantages:
- Building a house allows you to save a lot. You can also choose the materials, lighting, fixtures, and other items according to your budget and build a cheaper home. Thus, building your own home is an energy-efficient option.
- You can get construction loans if you don’t have money to build a home. Construction loans provide a line of credit to help you during the construction stages.
Disadvantages:
- Constructing a home takes longer, most probably a few months or years, depending on the type of home. This might be problematic if you plan to have a home as soon as possible.
- Building a new home is complicated. Plus, you have to take care of everything, and overall it can be a stressful experience.
Advantages and disadvantages of buying a home
Advantages:
- The process is much faster. You just have to choose an established property, handle the legal documentation, pay the property’s appraised value, and own it right away.
- Buying an existing home is very convenient. Most of all, you know what you’re getting because the property is already established.
- Most constructed properties are located in already established localities.
Disadvantages:
- You can’t personalize it because the home is already constructed. There might be many features unavailable in established properties.
- You have to pay Stamp duty which is too high for buying a home.
- An established house might be many years old and have gone through wear and tear.
Verdict: is it cheaper to build or buy in 2024?
You can personalize your home and build your dream home. Building a home allows you to customize everything from scratch according to your preferences.
However, the biggest disadvantage is that buying a home is costly.
After comparing building or buying a home, we analysed that building a home is cheaper than buying a home.
More on the build vs buy dilemma
Further Reading: Cost to Build a House in Melbourne
Is it cheaper to build or buy?
The answer to this question depends on a number of factors, including the location, the size of the house, the materials used, and the current market conditions.
In general, it is cheaper to buy an existing house than to build a new one. However, there are some cases where building a house can be more cost-effective.
For example, if you are building a custom home in a desirable location, the cost of building may be comparable to the cost of buying an existing home.
Will building costs go down in 2024 Australia?
It is difficult to say for sure whether building costs will go down in 2024 Australia. The construction industry is cyclical, and there are a number of factors that can affect prices, such as the cost of materials, labor, and land.
However, some experts believe that building costs may start to come down in 2024 as the housing market cools.
Should I build a house in 2024 Australia?
Whether or not you should build a house in 2024 Australia depends on your individual circumstances and goals. If you are looking for a custom home in a desirable location, building may be a good option for you.
However, if you are on a tight budget or are not sure how long you will stay in the home, buying an existing house may be a better choice.
Ultimately, the decision of whether to build or buy is a personal one. There is no right or wrong answer, and the best decision for you will depend on your specific circumstances.
Here are some things to consider when making your decision:
- Your budget: How much money do you have to spend on a house?
- Your timeline: How soon do you need to move?
- Your needs: What kind of house do you need or want?
- Your location: Where do you want to live?
- Your preferences: Do you want to build a custom home or buy an existing one?
Once you have considered these factors, you can start to narrow down your options and make a decision about whether to build or buy.
