What’s your position on buying property? Do you dream of a ‘renovator’s delight’? Or would you refuse to settle for anything but brand-new? Whatever your taste, property expert John McGrath explains the pros and cons, and important issues to consider.
Looking at apartments
It would be a mistake to believe that a new apartment will be totally free of defects. Freshly finished décor can hide a multitude of sins. That’s why you should get a proper building inspection as a trained eye will be able to pick up any problems. I also recommend researching the track record of the developer and builder before buying in a new block.
In the apartment market, I know buyers who won’t go near a brand-new block because the strata levies are often not yet set, they don’t know who their neighbours will be, and there’s always a risk that the place hasn’t been well built.
I also know of buyers who love new apartments. They like that everything is fresh and new with all the latest contemporary fittings, such as halogen lights, video intercoms, designer kitchen appliances, and extras, such as air-conditioning. They also draw comfort in knowing the fittings, plumbing and electrics are (usually) in top notch working order.
It’s often also the new high rise apartments that have the great array of residents’ facilities, such as a pool, sauna, concierge, communal gardens and barbecue areas. The ‘facilities phenomenon’ is directly related to changes in our lifestyle over the past 20 years. Developers recognise that today’s buyers are time poor and they’re designing new buildings accordingly. It’s fantastic to have these facilities available to you, as it certainly takes less time to walk downstairs to the gym than drive to your local Fitness First, but you will pay higher strata levies for the convenience.
With apartments, the benefits of buying ‘old’ instead of new is the comfort of knowing the building’s history. Everything related to repairs and maintenance is documented in the property’s strata plan register and you can pay someone to review it for any major problems.
Looking for a house
When searching for a house, buying new is more of a rarity. The average person doesn’t build a new home with the intention of then selling it. However, you can definitely find good quality new homes in housing estates.
Now, housing estates are not what they used to be and the ‘facilities phenomenon’ of new apartments definitely applies here too. There are plenty of examples of amazing housing estates with their own café and shopping villages, bicycle and walking tracks, parks, schools and recreational centres. Some estates even have their own golf courses! Basically, you don’t have to leave the estate to live your life.
These types of estates will either sell greenfield sites for you to build on, or they’ll offer completed houses with a variety of floorplans and facades. I’d advise you to avoid the cookie-cutter estates where all the houses are the same. If you’re buying into an estate, buy for the lifestyle it offers!
Period features are a big plus with ‘old’ properties. There’s something wonderful about buying a 100-year-old home with beautiful high patterned ceilings and fireplaces. The historical charm can be really heart-warming and when you’re buying a property for yourself and your family, these aesthetics can significantly contribute to the ambience of your ‘new’ home.
Hints for investors
If you’re an investor, one of the big advantages of buying a newly constructed property is that you can claim depreciation on the building as a tax-deductible expense. For buildings constructed after 15 September 1987, the ATO allows you to write off 2.5% of the original cost of construction each year.
This deduction can provide a significant boost to your cash flow position. If you want to claim this deduction, you’ll need a valuation of the building from a quantity surveyor – usually supplied by the developer. Make sure this is included in your contract of sale.
John McGrath’s final word
In short, there’s no black and white answer. Buying new versus old is largely a personal decision and I don’t recommend one over the other. It’s up to you to consider the pros and cons of each property and make a decision that suits your needs and budget.
For more information and advice, please visit www.mcgrath.com.au
