Housing as an investment: build or buy?

With Australians having one of the highest per capita love affairs with property of any industrial country, it is no surprise that many want to invest their money in bricks and mortar.

But the question being asked by many is whether they should build their dream home, buy an existing home, or buy a new home.

Those who buy an established home have the benefit of seeing exactly what the surrounding houses look like and how well they are maintained by the residents.

This is a definite advantage when compared to building a home on a new development, particularly in the early stages, where you may be building your home before the neighbours build theirs.

Choosing an established home also enables you to judge the home for street appeal and potential for improvement based on what you can see.

Usually, the previous owners have already done all or most of the work to establish the home. This makes it easy to judge whether your income will be enough to cover your loan repayments and leave sufficient to ensure you a reasonable standard of living. If it is an older home, you can budget for repairs, re-painting and general maintenance.

For others, the pleasures of stepping into a new home outweigh any work necessary to establish the home, such as gardens, paths and driveways. Floor coverings, curtains, light fittings, turf, fences and the driveway can be included in the buying price.

It is worth noting that those who have bought new, and have the time, can save money on the cost of establishing the home by doing as much of the work themselves.

If you want a new home and don't want to wait to move in, then one way around that is to try and buy a “spec” home: a home that a builder has already built and is offering for sale.

Prepared in conjunction with the Real Estate Institute of Queensland. www.reiq.com.au

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