New vs established properties – which is the better investment?

The decision to buy ‘new’ generally isn’t too difficult when looking at everyday items such as a TV, pair of shoes or a garden shed, but when it comes to an investment property, the choice isn’t quite so easy; there is no right or wrong answer and the answer usually starts with ‘it depends’!

There are pros and cons to buying a new property, just as there are plenty of reasons why you should or shouldn’t buy an established one.

Buying a new property in an up and coming, but less desirable, suburb may give you a better capital growth than an older house in a good suburb. However, some older properties lend themselves better to greater capital gains and an increase in rental income if they are in need of a bit of a refurbishment; we’ve seen people turn a $20,000 refurb into a $60,000 capital gain.

Here are a few more points for you to consider:

Buying a new property

Generally, the pros for a new property include:

  • Often come with structural guarantees and warranties
  • Better energy efficiency
  • Tenants like new properties so there are often lower vacancy rates
  • Usually lower maintenance costs

Cons for a new property include:

  • The property can be more expensive to purchase
  • Apartment blocks in a new development may result in oversupply potentially leading to difficulties in finding tenants, lower capital gains or difficulties in selling
  • Badly-designed and/or poorly located properties will experience low capital growth

Buying an established property

Generally, the pros for an established property include:

  • More negotiation buying power on any issues the building inspection find
  • Opportunities to ‘pick up a bargain’ and increase capital gains through renovation
  • Stronger performer in a slow market
  • Established historical sales data

Cons for an established property include:

  • Higher maintenance costs
  • Easements or caveats may affect your long-term plans
  • May need to do more work to prepare the property for rental

In our opinion, it’s more about working within your budget and selecting the right property and location to help you achieve your financial goals rather than whether the investment property is new or established.

If you want to know more about investing in property, get in touch!

We are one of Newcastle’s longest established real estate offices, so give us a call on 02 4954 8833, send us an email to mail@newcastlepropertymanagement.com.au  or pop into our Cardiff office for a chat.

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