Should you build, buy or renovate?

If you’ve outgrown your home, there are three main options: a new build, a renovation or buying another home that suits your needs. We explain the pros and cons of each.

A new build

If you’re planning an extensive renovation with plenty of structural changes, it may be cheaper to start from scratch with a new build. Factors to consider as part of your decision include the age of your home, its location and the lifestyle offered.

To kick-start your research, check out Archicentre’s Cost Guide, which can help you calculate the cost of a home improvement project, a renovation, a new home or a small property development. Costs can vary depending on the quality and complexity of the work you want to undertake. It’s also a good idea to keep in mind that renovation costs can blowout due to any unforeseen problems that may arise along the way.

One of the advantages of building a new home is you can ask your builder for a ‘fixed price contract’, which is a set price for all specified building works. Once you have a fixed price, you can then compare it to the cost of moving into a bigger home, which could help with your decision. This will include the difference between the price of the bigger home and your current home and transfer costs such as stamp duty, legal fees, removalist costs, pest and building inspections and insurance.

Buying an established home

Your main course of action will involve finding the home you want, putting in an offer and then moving in.

The potential downside of buying an established home is that it may be more expensive than other options. You may also have to sell the property you're living in and this can be time-consuming and disruptive. Buying and selling your home could also entail a number of expenses such as an agent's commission, stamp duty, conveyancy and moving costs.

Renovating your current home

A renovation may be the right choice if you’re happy with your current property and its locality and don’t particularly want to move. As an added benefit, a renovation doesn’t involve stamp duty charges or real estate agent fees. And depending on the nature of the works (and unlike a rebuild), you may not have to move out of your home while the renovation is progressing. You simply work and live around it.

Something to consider when renovating, however, is that it can be potentially very expensive. Many people also find that renovations can take longer to complete than originally planned – and also cost more than they budgeted.

Cost blowouts can occur where unexpected problems with the home’s condition arise that need to be fixed. Also many owners have a habit of making adjustments and additions to the original contract of works with a builder, and these adjustments can increase costs as the renovation proceeds.

Securing a number of building quotes and then keeping a lid on costs once the renovation gets underway can produce the best financial outcome for homeowners.

Next: Relocate or renovate?

Weigh up the pros and cons of renovating or relocating: think through costs, your ideal place to live and whether you can live through a major building project.
When property prices are rising, renovating for a quick return is a popular investment strategy. But when markets are sluggish, improving a property before ‘flipping’ it, can also generate profits for savvy investors.
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This information is current as at 20/10/2020.

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.

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