Is It Cheaper to Buy a House or Build One? 2024 Costs Comparison

For many buyers, the journey toward finding a forever home to settle down and build a life around comes down to the eventual question of ‘should I buy or build a house?’.

Among the various differences between the two options, cost is invariably going to be the largest contributing answer to whether you should build or buy.

With costs continuing to rise across Australia for both house building and house purchases, we’re here to help you find out if it’s cheaper to build or buy a house in 2024.

Cost considerations when buying a house

The national Home Value Index has been rising for 14 months in a row now, with a recent uptick of 0.6% in March 2024. As a result, buying a house in Australia is becoming more and more expensive. But it’s not just the value of homes that are the cause of this increase.

On average, the costs of buying a house range from 7 and 11% of the purchase price. For example, for a home valued at $500,000, buyers can expect to pay between $35,000 and $55,000 in extra fees in addition to the price of the home. Here are some of the most important cost considerations for buying a home: 

Stamp duty

Stamp duty is a tax levied by the state government based on a percentage of the house purchase value. It is required payment on the buyer’s end that varies from state to state. Some stamp duty concessions may be available to first-home buyers, and it’s important to take stamp duty into account as it can often cost as much as hundreds to thousands of dollars. 

Land tax

Land tax is an annual levy on the land that the property sits on. The amount is based on a certain value threshold and will change depending on where you live.

Potential repairs

Depending on the state and age of the property when it is bought, repairs may need to be made to upkeep the property, the cost of which can run into thousands of dollars. It’s not uncommon for major issues to surface much later after having lived in the house for some time.

Property inspection fees

These are the charges incurred for property assessment services by experts to identify any potential flaws before purchase. They are a required cost and a critical part of the purchase process, as they ensure that buyers are informed about the property's condition.

Cost considerations when building a new home

Building costs for a new home are likewise rising all across Australia, due to shifts in the market for labour and construction materials. According to the ABS’ findings in 2020, almost half of new residential dwellings (44.9%) cost more to build than they were approved for. Here are the essential cost considerations for building a new home:

Materials

The quality of materials chosen for the construction can significantly affect both the initial expenses and long-term maintenance costs of building a new home. More durable materials will usually have a higher upfront cost, while cheaper materials are more prone to frequent maintenance.

Site considerations

The site condition of the new home can impact the overall construction cost. Typically, a soil test will be done on the property to determine if more work needs to be done to set a proper foundation for construction to begin.

Poorer soil quality will require a higher-grade foundation that costs more, while a sloping surface of the block will require excavation work and the addition of retaining walls, which also incurs more costs.

Landscaping

Proper landscaping is an often overlooked part of building a new home. Depending on the work that needs to be done, the cost of landscaping can come as a surprise to some home builders.

Cost of living while the build occurs

Building a new home can take months, extending to over a year. Even with the financial coverage from the QLD 7 Year Building Warranty, home builders will need to factor in the cost of accommodation and transport during that time as they wait for the new home build to be completed.

Is it cheaper to build a home or buy an existing one?

No two homes are alike, and it’s difficult to directly compare whether it’s cheaper to build a home or to buy an existing one. However, there are a number of benefits that homeowners get with a new home build that simply can’t be obtained by buying an existing house, from customisation in terms of the style of the home, to the inclusion of more efficient energy saving designs, and in many cases, an overall more cost-effective way to create their dream home – not to mention a builders warranty for your peace of mind. 

At John Munro Builder, we offer the chance for future homeowners looking to build a house in Townsville and North Queensland. Browse our Townsville house and land packages today and build your future home with us!