If you’re searching for your next home, you are probably weighing up the costs of building vs buying.
There is a common misconception that it’s more expensive to build a new home. While this can be true in some cases, it’s generally cheaper to build a home in most parts of Australia. This is largely thanks to the rising cost of established properties and our popular inner-city suburbs.
In this article, we’ll see whether it’s cheaper to build or buy a home, and some of the factors you need to consider when making your decision.
Is it Cheaper to Build or Buy a Home in 2024?
It’s cheaper to build a new home rather than buying an existing property in Brisbane. This also applies to most of Australia’s capital cities. The cost of building vs buying depends on the location, the design of your home, the quality of finish and other factors.
We’ve put together a table showing the average cost of buying an existing house versus building a new home:
| Median House Price | Median New Build Price (House + Land) | % Difference | $ Difference | |
| Brisbane | $873,987 | $856,881 | -1.96% | -$17,106 |
| Sydney | $1,174,867 | $1,128,189 | -3.97% | -$46,678 |
| Melbourne | $781,949 | $883,787 | +13.02% | +101,838 |
| Adelaide | $776,597 | $699,066 | -9.98% | -$77,531 |
| Canberra | $870,910 | $1,237,573 | +42.10% | +$366,663 |
| Perth | $773,335 | $739,847 | -4.33% | -$33.488 |
Source: Property Update, Property Update, UDIA, BMT Surveyors, ABS
This table doesn’t take into account the money you save on agents fees and stamp duty. When you factor in these savings, building a new home can be substantially cheaper than buying an existing property.
These prices are only an indication. The actual cost of a new build varies widely. You’ll need to speak with your builder for an accurate quote in your area.
Stamp Duty Savings When Building a New Home
Stamp Duty is a one-off tax you pay when buying a house or vacant land. It’s calculated as a percentage of the purchase price, so it can be a major expense.
When buying an existing home, you pay stamp duty on the entire value of the house and the land it’s on. When you build a new home, you only pay stamp duty on the cost of the land. That can save you tens of thousands of dollars!
We’ve used Australia’s median house prices to estimate the stamp duty you’d be required to pay when buying an existing home:
| Stamp Duty Payable When Buying an Existing Home | ||
| Median House Price | Estimated Stamp Duty | |
| Brisbane | $873,987 | $25,180 |
| Sydney | $1,174,867 | $47,339 |
| Melbourne | $781,949 | $41,987 |
| Adelaide | $776,597 | $36,543 |
| Canberra | $870,910 | $26,659 |
| Perth | $773,335 | $30,945 |
Source: QLD, NSW, VIC, SA, ACT, WA
Compare this to the amount of stamp duty you pay when building a new home:
| Stamp Duty Payable When Building a New Home | |||
| Median Lot Price | Estimated Stamp Duty | Amount Saved | |
| Brisbane | $374,000 | $11,515 | $13,665 |
| Sydney | $641,250 | $23,387 | $24,012 |
| Melbourne | $394,000 | $16,070 | $25,917 |
| Adelaide | $258500 | $9,358 | $27,185 |
| Canberra | $679,375 | $19,150 | $7,509 |
| Perth | $245,000 | $6,745 | $24,200 |
Source: QLD, NSW, VIC, SA, ACT, WA
Depending on where you buy and whether you’re buying a first home, investment or off-the-plan property, you may be entitled to additional stamp duty concessions. These can further reduce the cost of your home building project.
Factors That Affect Your Decision to Build or Buy
Building a new home is often cheaper than buying an existing property. But the cost of either decision varies widely throughout Australia. Many considerations can affect your decision to build or buy, including:
1. Location
Location is a major factor when buying a new home. The location you choose impacts the price, and it also affects your access to friends, family, schools, amenities and other lifestyle features.
When you buy an existing home, you have more freedom to choose a property in an established suburb. That’s great for your family and lifestyle needs, and it can also shorten your commute to work.
Compare this to new home builds, which typically occur in up-and-coming suburbs that may be further away from the action. Depending on your budget, it’s possible to secure vacant land in an established suburb, but that’s an additional expense you’ll need to budget for.
2. Creative Freedom
There’s nothing quite like living in a home you designed yourself. Building a new home gives you complete creative freedom to design spaces that perfectly support your family and lifestyle.
If you need additional bedrooms, office space, specialty entertaining areas or a spectacular master suite, a custom home build offers everything you’re looking for.
Compare this to buying an existing home, which typically involves compromising on the features you want. You’re locked into the original floorplan, and the cost of renovations adds up quickly if you want to update rooms like the kitchen or bathroom.
3. Timeline
Getting into a new home takes time. The process can take anywhere from a few weeks to 12 months, depending on whether you decide to buy or build.
As a rule of thumb, it takes anywhere between 6-12 months to construct a new home. That doesn’t include the time you spend researching builders, finding the perfect block of land and designing your ideal home.
On the other hand, it may only take you 2-3 months to buy an existing home, but the process can be drawn out if you are struggling to find the perfect property.
4. First Home Buyers’ Grant
Each Australian state provides a grant to first home buyers. For 2024, these grants have been updated to encourage more people to build new homes. That means you can access the grant when you choose to buy or build a new house as your first property.
Here’s how much eligible buyers are entitled to in each Australian state:
- Queensland – Up to $30,000
- New South Wales – $10,000
- Victoria – $10,000
- South Australia – $15,000
- Australian Capital Territory – Stamp Duty concessions only
- Western Australia – $10,000
First home buyers are also entitled to stamp duty concessions and other benefits in each state. Talk to your lender to find out whether you’re eligible.
5. Sustainability and Energy Consumption
Almost 50% of Australians are looking for eco-conscious homes with sustainable materials and energy-efficient features. That can be an issue if you’re buying an existing property.
Older houses rarely feature the sustainable materials and energy-saving design that modern homes are known for. If you buy an existing property, you won’t benefit from things like recycled materials, passive heating and cooling, double glazing and energy-efficient appliances.
A newly built home can incorporate as many sustainability features as you want! Sustainable building practices are always advancing, and building a new home is the best way to take advantage of passive heating, solar power, house batteries, efficient appliances, natural lighting and eco-conscious design.
Build a Home that Supports Every Part of Your Life with McCarthy Homes!
Building a house vs buying an existing home is one of the biggest decisions you’ll ever need to make. Your choice can have a major impact on your budget and lifestyle, and it can also impact things like long-term capital growth.
If sustainability, creative freedom and lifestyle are at the top of your wish list, it’s time to start a conversation with McCarthy Homes! McCarthy Homes is an award winning custom home builder that works across South East Queensland.
We specialise in crafting incredible homes that feature timeless design, quality finishes and the personal touches your lifestyle needs. You can explore our home designs on our website, or contact our team to discuss building a new home with McCarthy!
