Are you dreaming of owning your first home in Sydney but feeling overwhelmed? Many first-time buyers struggle with a big decision: build new or buy established? This guide will help you navigate Sydney’s real estate market and find your perfect path to homeownership.

At Provincial Homes, we’ve guided countless buyers through this decision for more than three decades. We’ve seen the joy of new homeowners in custom-built houses and the excitement of others finding their match in established neighbourhoods.

Let’s explore:

Sydney’s current housing market overview
Pros and cons of building vs buying established
Key factors like credit scores, deposit amounts, and genuine savings
Understanding due diligence and exchanging contracts

We’ll help you make an informed decision aligned with your eligibility criteria and financial situation. Whether it’s a newly built dream home or an established property, we’re here to guide you through Sydney’s diverse types of property.

Understanding the Market

Before you dive into Sydney’s property market, it’s crucial to grasp the current landscape and trends shaping home prices and buyer opportunities across the city.

Current Trends in the Sydney Real Estate Market

Sydney’s property market in 2024 remains dynamic, with median prices reaching $1.17 million, up 6.3% annually. High auction clearance rates and market fragmentation persist, with affluent areas outperforming others. Forecasts predict further 4-7% value increases, impacting both homebuyers and investors. Understanding these trends is crucial for navigating the market effectively.

Factors Influencing First Home Buyers’ Decisions

When buying your first property, several factors come into play:

Affordability: Stretched affordability remains a significant barrier. Many first-time buyers are exploring various types of property, including apartments and townhouses, or considering more affordable suburbs.
Interest Rates: The current high interest rate environment impacts borrowing power and mortgage repayments. Prospective buyers should consider consulting a mortgage broker to understand their loan options and potential home loan deposit requirements.
Government Incentives: Various grants and schemes, such as the home owners grant and buyers assistance scheme, continue to play a crucial role. These initiatives can help offset the costs of buying a property and improve affordability for first-time buyers.

Financial Considerations

When home buying, it’s crucial to consider various financial aspects:

Budgeting: Establish a clear budget that accounts for not only the purchase price but also ongoing costs. This includes understanding your credit score, obtaining credit reports, and determining your deposit amount.
Financing Options: Explore different home loan products and use loan calculators to estimate your mortgage repayments. Consider factors such as lenders mortgage insurance and the potential need for a personal loan to cover additional costs.
Government Incentives: Programs designed to assist first home buyers can significantly influence financial planning. Be sure to check with Revenue NSW or the Office of State Revenue for information on available incentives and how to calculate any applicable stamp duty or transfer duty.
Due Diligence: Before making an offer, conduct thorough due diligence. This includes arranging building inspections, understanding the cooling off period, and being prepared for the exchange of contracts.
Additional Costs: Factor in other expenses such as strata fees (for apartments), land tax, potential pest inspection costs, and health insurance considerations.

Building a New Home

The process of building a home in NSW is different from regular home buying or purchasing a rental property. It comes with its own set of advantages and challenges, including considerations like property tax for investment properties. Here’s what you need to know:

Pros of Building

Customisation: Design your dream home to your preferences, from room sizes to finishes. This level of control is rarely possible when buying property that’s already built.
Modern amenities: New homes come with the latest technology and energy-efficient systems. These features can contribute to saving money in the long run through reduced mortgage repayments and lower utility bills.
Lower maintenance and warranties: New homes often require less upkeep initially and come with warranties, potentially saving you thousands of dollars in repairs compared to older properties in Sydney.

Cons of Building

Time-consuming: The buying process for a new build can take months or even over a year, from obtaining permits to construction completion. During this time, you might need to consider temporary housing and health insurance options for your family.
Cost overruns: Unexpected expenses or upgrades can increase the final purchase price beyond initial estimates. It’s wise to consult with a mortgage broker or seek financial advice to understand your borrowing power and explore various loan options.
Location limitations: New builds are often in developing areas, which may be farther from amenities or city centres. This contrasts with established areas like the eastern suburbs or lower North Shore, where property values tend to be higher but offer more convenience.

Steps in Building a Home

1. Finding Land 

Your dream home journey starts with finding the right plot. Consider the region, neighbourhood, proximity to amenities, and property values in the area. Ensure the land is suitable for building and aligns with your budget. This step may involve working with real estate agents or property buyers to find the perfect spot in your desired location, whether it’s the Greater Western Sydney suburbs or lower north shore.

2. Choosing a Builder 

Selecting the right builder is crucial for your property investment. Research reputable builders, check their past projects, and read home buyers guides for tips. Meet with several builders to discuss your vision and budget. Choose someone who communicates well and understands your needs. Consider asking about their experience with types of property you’re interested in, whether it’s a residential property or a commercial property.

3. Design and Approval 

Work with architects or designers to create plans for your ideal home. This stage involves making decisions about layout, materials, and features. Once you’re satisfied, the plans need approval from local authorities. This process ensures your home meets safety standards and zoning requirements. It’s also a good time to consider property inspections and a building and pest inspection to avoid future issues.

4. Construction Process 

This exciting phase turns your plans into reality. The construction typically follows these stages:

Site preparation and foundation
Framing (the “skeleton” of your house)
Exterior work (roof, siding, windows)
Interior systems (plumbing, electrical, HVAC)
Interior finishes (drywall, flooring, painting)
Final touches and inspections

The timeline from breaking ground to settlement day can vary, typically taking several months to a year, depending on the complexity of your project and factors like weather.

Financial Considerations

Costs Involved: Land purchase typically accounts for 25-35% of the total budget. Construction costs cover materials, labor, and permits. Additional fees include building inspections and utility connections. Set aside 10-15% for unexpected expenses.
Financing Options: Home loans are common for home builds. Consider your borrowing power and credit score when applying. Loan calculators can help estimate options and required deposit amount.
Government Incentives: The First Home Owner Grant assists first-time buyers. Other grants and schemes may offer benefits. Buyer assistance programs provide information on eligibility criteria and the buying process.

Buying an Established Home

Buying an established home is a popular choice for many property buyers in properties in NSW and properties in Sydney. It’s a significant decision that comes with its own set of advantages and challenges. Let’s break down what you need to know as a potential property buyer:

Pros of Buying Established

Immediate availability: This means you can move in right away. Once you complete the private treaty purchase, it’s ready for you to live in. You don’t have to wait for anything to be built or finished.
Established neighbourhoods: These are areas that have been around for a while. They usually have mature trees, parks, schools, and shops already in place. This can be particularly attractive for those considering property investment in Sydney.
Potential for negotiation: When buying an existing home, you might have more room to discuss the price ranges with the seller. There’s a chance you could get a better deal, especially if the owner is keen to sell, potentially creating good investment opportunities.

Cons of Buying Established

Limited customisation: This means you might not be able to change everything about the house to fit your exact wants. The layout, room sizes, and some features are already set, which might affect your genuine savings in the long run.
Maintenance and repairs: Older homes might need some work. You could find yourself needing to fix things soon after moving in. It’s wise to budget for this, possibly considering a personal loan if necessary.
Potential hidden issues: Sometimes, there are problems with a house that aren’t easy to spot at first. Even after a thorough pest inspection, you might discover issues later on that you didn’t know about when you bought the house.

Steps in Buying an Established Home

1. Researching the market

Research the Sydney property market. Explore neighbourhoods, check property prices, and use property buyers guides. Consider consulting buyers agents for insights on properties in NSW. 

2. Property inspections

Conduct property inspections. Visit potential homes, perform due diligence with building and pest inspections. Use an inspection checklist and evaluate the neighbourhood. Consider strata fees for apartments. 

3. Making an offer

Make an offer. Determine your borrowing power, prepare for buying at auction or private treaty. Negotiate the purchase price with help from real estate agents. Consult a mortgage broker about home loan options and use loan calculators. 

4. Finalising the purchase

Finalise the purchase. Secure financing, pay the home loan deposit, and budget for stamp duty and lenders mortgage insurance. Check eligibility criteria for first home owner grant. On settlement day, complete the exchange of contracts and receive your keys.

Financial Considerations

Purchase price: Encompasses land, construction, and fees. Varies significantly in the Sydney property market. Land is often the largest expense.
Financing: Construction loans common, differing from standard mortgages. Require home loan deposit, offer staged funding. Interest-only payments during building. Convert to regular mortgage upon completion. Mortgage brokers can advise on options.
Government support: First home owner grants, stamp duty concessions available. Check NSW Government or Revenue NSW for eligibility. Can offset costs like lenders mortgage insurance.
Additional costs: Budget for pest inspections, architect fees, permits. Consider potential strata fees for apartments.

Comparing Building vs. Buying Established

1. Cost Analysis

Building a home involves land purchase, construction costs, and permits. Buying established means paying the purchase price and closing costs. Consider your borrowing power and home loan deposit needs. New builds often have lower initial maintenance costs and better energy efficiency. Established homes might need more upkeep. Factor in stamp duty, strata fees, and mortgage repayments.

2. Lifestyle Considerations

Building offers more options in newer areas, while established homes are often in settled neighbourhoods close to amenities. Think about locations like Greater Western Sydney suburbs or lower north shore when exploring Sydney property. Building lets you design your dream home, while buying established offers move-in readiness. Always conduct a building and pest inspection.

3. Market Conditions

Building costs depend on materials and labour. Established home prices reflect the real estate market. Research the Sydney property market and consult real estate agents or buyers agents. Consider potential for property investment in Sydney and long-term property values.

Making the Decision

Evaluating Personal Needs

Think about what you and your family really need when buying property. Are you buying your first home or looking to upgrade? Consider your long-term plans. Do you need space for a home office or growing family? This evaluation is crucial in the buying process.

Seeking Professional Advice

Getting expert opinions is a smart move in real estate. Talk to buyers agents who understand the market inside out. They can guide you through buying at auction or private sales. Seek financial advice to understand your budget and genuine savings requirements. If you’re leaning towards building, consult with builders about costs and timelines. For existing homes, don’t forget the importance of a building and pest inspection.

Use online resources like property inspections checklists and guides to buying to help your decision. Look into grants and schemes that might assist you, especially if you’re buying your first property.

Final Considerations

Weigh your options carefully:

Compare the pros and cons of building versus buying at auction or through private sale.
Consider property investing potential for each option.
Understand the exchange of contracts process for both scenarios

Summing up

Choosing between building a new home and buying an established property is a crucial decision for first-time Sydney home buyers. This guide provides a comprehensive overview of both options, covering market trends, financial considerations, and the pros and cons to help you make an informed choice aligned with your needs and budget.

Need more information? Our team is here to help. Reach out to us on 02 9629 5200 or through our website provincialhomes.com.au if you have any questions about the home buying process or your specific situation.

Discover what Provincial Homes can offer you. Explore our display homes, browse our diverse range of designs, and read testimonials from satisfied customers on our website. Book a free site assessment to take the first step towards your dream home.