If you’re looking to build a brand-new home, there are a couple of ways to go about it. You can buy an established home to knock down and rebuild or search for a ‘unicorn’ vacant block in an older suburb, or you can do what thousands of other Australians are doing and join a new community.
Blocks of land in established communities are typically close to amenities and public transport, but the purchase price and construction challenges can make them difficult to justify for the average home builder. However, new developments located further away from the city also pose some challenges.
So, which is best for your lifestyle, budget and long-term financial goals? Let’s explore the advantages and disadvantages of building in a new housing estate and an established community.
New Estates vs Established Suburbs
New housing estates are like blank slates. They are created by developers who buy large parcels of land, excavate the site to create mostly flat blocks and add infrastructure like roads and parks before the land is divided into lots for new homes. When you buy in a new estate, you may buy a house and land package either directly through the developer or via a third party, or you may buy just the land.
While land in new estates is generally more affordable than in an established suburb, lot sizes are usually smaller. In an established community, you will likely have to pay more for a block of land, but these ‘infill’ lots can be much bigger.
Suppose you’re planning on applying for a first-home owner grant or another government incentive to help fund your build. In that case, the total price of the project can play a major part in where you decide to build, as these funding streams are often capped, depending on the house and land value.
The Pros of Building in a New Estate
Building in a new estate can be a more straightforward process, especially for those who have never built a home before. Here are all of the ways building in a new estate can pay off.
Straightforward build compared to buying established blocks
When you build in a housing estate, the block will normally have been levelled already and services are new and easily connected to. All of this means your home may be more cost-effective to build, especially if it is one of many being built at the same time.
Fixed designs eliminate choice overload
The majority of the homes that you’ll find in new estates are project homes. This means many of a similar design are built at once. Although you can still customise layouts and materials to some extent, you’ll save time and money by leaving the big decisions up to your builder’s design team.
It makes sense financially
Land on the fringe of urban areas is cheaper to purchase and because they offer greater energy efficiency, they are also cheaper to run. A brand-,new property will also have greater tenant appeal, and this demand means a high rental yield.
There’s a strong sense of community
Because everyone is new to the neighbourhood it can often be easier to become part of the community in a master-planned estate. If this is important to you, look for estates that have committed to building large public spaces like parks, provide community amenities and put on regular events.
The Cons of Building in a New Estate
Building a home in a new estate isn’t for everyone. Here’s why.
Distance can be an issue
New communities are often located on the fringes of established cities, making them further away from amenities and jobs. There may be limited public transport, a greater distance to local schools and fewer shops and health services.
May not suit all financial circumstances
Properties in new housing estates have a lower land-to-asset ratio, limited potential to add value with renovations and can suffer from oversupply in a competitive market. This means there is lower capital growth potential in the short to medium term. Without a solid sales history, it can also be difficult to predict appreciation and budget for your build accordingly.
Smaller blocks and less greenery
While many master-planned communities have dedicated green spaces, they can lack the character (and shade) that large, established street trees provide. Prospective buyers can also be put off by smaller-sized blocks that lack backyards and space for growing families.
New estates lack character
As well as the possibility of having to endure ongoing construction noise and dust, new estates lack the character that older-style properties provide to neighbourhoods. This is due to a limited range of house designs that cause a cookie-cutter look, and it will make it difficult to differentiate your home when selling.
The Pros of Building in an Established Suburb
Many people choose to build in an established suburb because it gives them a better lifestyle. Here are some of the other benefits.
Close to amenities and established infrastructure
Blocks of land in older communities are more likely to be closer to established transport networks, schools, shopping centres, restaurants, parks, sporting facilities and employment opportunities, saving you time and money on commuting.
Higher land value
There’s a higher potential for capital growth when building in an established suburb compared to a new development due to higher land value. And with a solid resale history, it’s easier to estimate the future value of your property. All of this means the resale value of your home is likely to be much higher should you wish to sell in the near future.
Better rental yield
With increased property values comes increased rental income, as prospective tenants look for new homes located in convenient locations that have greater energy efficiency and lower maintenance requirements.
Greater design control
As long as your planned home meets council requirements, you have more freedom to design the style of home you want when you choose to build among established homes. This not only results in a home that’s more ‘you’, but it can also lead to higher resale value as your home stands out from the rest.
The Cons of Building in an Established Suburb
While new homes in older suburbs can deliver greater rental returns for investors and a better lifestyle for families, there are some downsides to be aware of before you make your final decision.
Delays and construction cost blowouts are more likely
Whether it’s an entirely new build or a knockdown rebuild of an established property, established blocks usually require more site preparation. You are also likely to face many unexpected expenses, such as hidden hazards in an existing home or older infrastructure that requires upgrades. And, if you’re planning on knocking down an existing property to build a new one in an established community, open communication with your neighbours is a must to avoid objections that may cause the building to come to a standstill.
The other factor to consider is building timeline blowouts, with new data showing that building a detached house is now 35.8% slower than it was a decade ago. Any construction delays are sure to add to the cost, which can be especially problematic if you are funding the build using a construction loan.
Town planning
A brand new home in an established suburb is subject to strict town planning regulations that can limit architectural design choices and cause project delays. New builds must fit the character and style of the neighbourhood, and blocks can be subject to overlays that require style or material compromises.
Comparing New Estate vs Established Suburb
Factors to Consider When Deciding
Deciding between a new estate and an established suburb is an important choice. Here are some questions to ask yourself before deciding:
- What are your current and future lifestyle preferences?
- How will the location will impact your daily commute and social life?
- What is the proximity to schools and universities?
- What is your realistic budget?
- Is this a forever home, or are you looking to downsize?
- What are your capital growth and investment goals?
- Is there enough room for all family members to grow?
Expert Insight or Builder’s Perspective
Property trends across the country highlight the gaps between newer estates and more established suburbs. Prices are rising in most major cities and some regional areas, according to the Commonwealth Bank, but the biggest growth still comes from those suburbs with existing and solid infrastructure, such as parts of Brisbane and the Central Coast.
Experts at BritWealth note that older suburbs tend to hold their value because buyers know exactly what they’re getting. New estates, on the other hand, often rely on future parks, schools, and transport links to boost their appeal. Overall, the market continues to reward areas with history and stability, which newer developments are just starting to build.
Still On The Fence About Where To Build? We’re here to help
The decision on whether to build your house in a new estate located on the city fringe or an older, more established suburb comes down to personal preference, budget and your long-term financial goals.
If you’re still on the fence, Vision Homes is here to help. We’re more than a home builder. We offer tailored advice specific to your lifestyle requirements. If you’re ready to explore your building options, contact our friendly team today. We can help you find the perfect home design for your ideal location.
FAQs
What are the disadvantages of building a new house?
The disadvantages of building a new house include high initial costs, the potential for expenses to rise, construction delays and a possible negative impact on free time and family life.
What are the pros and cons of suburbs?
While suburbs are close to everything, home buyers and builders can face greater, more costly challenges when trying to build a house in an established community.
What is the difference between new build and existing investment properties?
New builds offer lower maintenance costs and higher potential for tax perks. However, an established house can be cheaper to buy and present to opportunity to add value.
Which is more important, house or location?
While you can change a house, you can’t change its location. Therefore, when it comes to what’s more important, the house or the location, it’s the location every time because it has a greater impact on lifestyle and resale value.