Is it better to purchase a new build or an existing property?

Sue Tierney

Buying your first property is one of the most significant decisions you'll likely make.


Choosing whether to go for a new build or an existing property can be confusing. It's worth discussing the pros and cons of going for either a new build or an existing property.


New Build Homes


There's nothing like turning the keys to a brand new house that you finally own. Beyond this, there are also several good reasons to go for a new build over an existing property.


1. Additional financing via the First Home Grant


If you and your partner meet the requirements for a Kāinga Ora First Home Grant, you can get up to $10,000 each to add to your home deposit. The extra money is an excellent way to add to your initial deposit, especially if you are looking to expand your budget for more options in the property market. It is also a way to reduce the principal you'll have to pay over the term of your loan.


2. Get approved for a smaller deposit


Those looking to purchase a new home are likely able to qualify for loans requiring a smaller minimum deposit - typically starting at an average cost of 10%. This can help aspiring property owners with a more limited deposit fund to get their foot in the door easier when climbing the property ladder.


3. Easier and cheaper to maintain


Much like anything that is brand new, a new home is less likely to require extra costs for maintenance or repair - especially within the first couple of years of its life. This can save you from a lot of potential headaches from additional expenses, especially considering all the different parts of a house that wear out over time (plumbing, wiring, insulation and heating, for example).


4. Lower insurance costs


New homes are required to follow the latest compliance requirements before they are built. This makes it less risky (and therefore may be easier) for insurance companies to cover your home at a lower cost, especially compared to older homes.


5. Better efficiency and energy costs


Newly built homes must also be up to code. The Building Code of New Zealand is an extensive list of requirements that homes must follow, such as appropriate ventilation levels, natural light, insulation, and structural stability. Adhering to this code ensures that the costs you would incur, such as heating or general electricity use, would be more or less within a reasonable amount.


6. Easier to resell


A property that is up to current Healthy Homes standards and the Building Code of New Zealand will also make it much easier to sell, should you desire to go that route in the future. This will go a long way in giving potential buyers the peace of mind they need to purchase your home. 


Additionally, should you decide to sell your property, later on, preparing a recently compliant property to be fit for sale is much easier than an older property that hasn't been compliant in years.


Purchasing Existing Homes


Why wait for your dream house to be built when it already exists? From getting the best locations, having a home with character, and faster occupancy, going for an existing home can give you various advantages you wouldn't get otherwise.


1. Fixed cost


Unforeseen circumstances can cause a new-build property's labour, material and construction costs to quickly spiral out of control during its construction. On the other hand, the price for an existing home is often set in stone once the auction and negotiations have concluded. This simplicity will likely give aspiring homeowners and property investors the peace of mind they need to proceed with the purchase.


2. Character


For some people newly-built homes can often feel sterile, uninspired, or even downright similar to other newly-built houses in the area. Going for an existing home will likely give more exciting options for adventurous buyers looking to acquire a property with character and style. 


3. Better location


Whether you are looking to live closer to your nearest city centre, set your sights on a specific school for your children, or want a scenic beachfront property, popular areas rarely have any undeveloped land left for new builds. That's why going for an existing home will likely be your only option when it comes to getting the best locations possible for your property.


4. Less waiting for occupancy


Not a fan of waiting a year before occupying your newly purchased property? Going for an existing home also means much less waiting before occupancy. When you've ticked the boxes, and the paperwork has been approved, you and your family can start moving into your new home.


5. More landscaping options


Unlike their newly-built counterparts that sometimes come with limited landscaping, existing homes have often had the time to grow a lush landscape. This abundance of landscaping options is worth considering, especially for property buyers with a bit of a green thumb.


6. More DIY opportunities


For experienced investment property owners, doing key renovations for an existing home can easily add thousands to a property's market value - making it an excellent opportunity for profit. This, however, requires more diligence and prior experience as existing homes are typically harder to repair back up to code.


Talk to our team


Whether you are looking to purchase your first home or are interested in growing your investment property portfolio, talking to an independent financial adviser can help you make more informed and profitable decisions. Let us know if you'd like a quick chat about an upcoming property purchase - we would be more than happy to help!

We're here to help you with home loans, personal finance & insurance.

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