First Home Buyers
Building vs Buying a House: Which is Cheaper in WA?
Our expert financial team will happily answer all your finance questions to get you started ASAP.
Better Way 2 Build research has shown there are three main reasons that people want to buy their own home:
They want a place they can call home.
They want somewhere to bring up their family.
Owning a home is considered a better option than renting
While these are strong motivations for owning a home, there are differing views on whether it’s better to build a new home or buy one that’s already built.
Because home ownership is such a big financial investment, the costs of building a new home versus buying an already built one is naturally a significant factor.
According to financial comparison website finder, it’s often cheaper to buy a block of land and build a home on it compared with buying an established property.
However, it’s important to note that building a house presents other potential challenges, such as long construction times and limited availability of vacant land in established suburbs.
On the plus side, there are several advantages to building a new home compared with buying one – particularly if you are a first-time buyer:
- Personalisation: You have more control over the design and finish of your home.
- Lower maintenance: A new home will need less maintenance upfront.
- Stamp duty: This can be a substantial cost but is waived in WA.
- Modern features and appliances: You choose materials, lighting, and heating and cooling, incorporating the latest, energy-efficient technology.
And, while you might know what you’re getting when buying an established home, the costs associated with improving and maintaining existing homes can be high. For example, renovation costs across Australia are rising fast and are expected to continue to grow over the next year or two.
| Feature | Building a New Home | Buying an Established House |
|---|---|---|
| Upfront Costs | Lower. You typically only pay stamp duty on the land, not the house. | Higher. Stamp duty is calculated on the total value of the house and land. |
| Maintenance | Minimal. New builds come with structural warranties and new appliances. | Variable. Older homes often require immediate repairs or upgrades. |
| Customisation | Total Control. You choose the floor plan, finishes, and smart tech. | Limited. You are restricted to the existing layout or costly renovations. |
| Move-in Time | 12–24 Months. Subject to council approvals and construction phases. | 30–90 Days. Generally follows a standard settlement period. |
| Energy Efficiency | High. Modern homes must meet 6-star (or higher) energy ratings. | Low–Medium. Older homes often lack modern insulation and efficient heating. |
| Government Grants | High Accessibility. Often eligible for FHOG and various building boosts. | Limited. Grants for established homes are often lower or non-existent. |
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To help in your decision-making process, here’s a breakdown of the key costs in building a new home or buying an existing one
Below is a guide to the upfront and ongoing costs of purchasing an existing property and building a new home in Western Australia. This is general in nature and all costs are approximate. You will need to do your own research on the property beforehand depending on your own financial situation.
Building new House & Land package
The deposit starts from 2 per cent of the contract purchase price and is paid at land settlement.
If your land is below $300,000 and you are a First Home Buyer, you will not pay Stamp Duty in WA.
Only payable on the land when building a new property.
Also commonly known as ‘Transfer Duty’, transfer duty is a tax based on the purchase price of the property. It is levied by the State Government to cover the costs of transferring the title of the property.
Visit the WA Department of Finance for more information and to view transfer duty rates in Western Australia.
If you take out a mortgage (home loan) to fund the purchase of your new home, the bank may register a mortgage against your property to secure the loan. There is a one-off Landgate registration fee to register a mortgage.
You’ll need to consider if you want to go with a standard builders design or make changes and upgrades
Professional assistance by a suitably qualified person is needed to legally transfer ownership of the property you are buying. A settlement agent or lawyer can conduct property and title searches to ensure the seller is legally entitled to sell the property. If you’re purchasing a strata property, they will make enquiries to the strata body corporation in relation to levies and insurance. Ranging from $1500
Many financial institutions charge a fee simply for applying for a home loan or to set up your home loan account. Other common fees include valuation fees, document preparation fees, bank cheque fees and monthly or annual account services charges. These fees will normally be deducted from the amount of money you borrow, before funds are made available to pay for your new home. Fees can vary significantly between lenders, so do your research to find out exactly what fees and charges you must pay.
Banks and other financial institutions will charge a one-off insurance fee if your home deposit is less than 20% of the property value. This is generally 1-3% of your loan amount and provides insurance to covers the lender. To avoid paying this fee, you will need to save a larger deposit or offer additional security. If purchasers go through Keystart there may not be LMI.
Site costs are the costs of preparing your block of land for building.
Basic fencing and landscaping is usually included in standard builders packages but it is worthwhile checking upfront
Smart Wiring is a system that combines various types of wires inside a home into a single platform. The wiring system allows homeowners to integrate their smart technology, such as home security systems and sensors, throughout their homes. It is cheap to use smart wiring although it is not a standard in many buiilders packages. If it is of interest, be sure to ask upfront.
In WA all new houses are NBN ready. Your new home will have the essential phone and internet connections, however it is important to check carefully where these are placed and if there is a sufficient amount for your current and future needs.
Solar electricity is one way to power your home that benefits the environment. There are no direct greenhouse gas emissions because the electricity is made from sunlight rather than burning fossil fuels. Sunlight is a renewable energy source, meaning we will never run out of it. Although it is becoming more common to include some solar panels as part of standard building packages, be sure to check the type and number of panels, quality of inverter, warranties and if there is a battery – and if all this is suitable for your needs. If not, it may be worthwhile engaging a specialist company to install the panels after construction is complete.
It isn’t uncommon for new construction homes to be missing a few essentials here and there. Contractors usually have a fixed number of appliances and facilities they offer in new construction homes, depending on how much room their budget allows and, more importantly, what you are expecting, considering the money you spent.
Variations are commonly referred to as the changes in the previously agreed upon building contract. These can typically include anything from changes in the design of door, windows, walls, taps etc, to variations in the quality of the product and the order of construction.
In a nutshell, the WA government gives you money to help buy your first home.
It’s a non-repayable gift of $10,000 to get you into the market sooner.
Although you won’t be paying full mortgage whilst building your home, it’s important to be able to cover your living arrangement whilst your new home is being built. Keep in mind, some lenders can help cover your rent whilst building – talk to our finance broker to find out more.
FIRB is an Australian government department that assesses applications from foreigners who would like to invest or buy a home in Australia.
Each house now requires a 6 star energy rating in WA. Certain developments will require you to use more energy efficient items such as taps, toilets, shower heads, solar power, demand response for air conditioning and hot water units etc
Fees will be applicable if you have overhead powerlines (tiger tails) or on a main road (traffic masnagement). They can range from $2000 – $10,000 on the build.
There’s always always risk once you have signed a contract if there are title delays on your land – material or trade shortages, weather issues, etc
A Bushfire Attack Level (BAL) assessment (basic) is a simplified process for determining the BAL for a building, or proposed building, that has a risk of bushfire exposure due to bushfire prone vegetation.
Before moving into your new property, you may need to set up and pay for any utilities and services to be connected. They are likely to be one off payments and, for Perth buyers, can include:
Gas – Klleenheat or Alinta
Electricity – Synergy
Telephone
Internet
Cable television – Foxtel
In Perth, your conveyancer will assist you in setting up your new water account with the Water Corporation as part of the settlement process.
Buying an established home
Professional assistance by a suitably qualified person is needed to legally transfer ownership of the property you are buying. A settlement agent or lawyer can conduct property and title searches to ensure the seller is legally entitled to sell the property. If you’re purchasing a strata property, they will make enquiries to the strata body corporation in relation to levies and insurance. Ranging from $1500
Professional assistance by a suitably qualified person is needed to legally transfer ownership of the property you are buying. A settlement agent or lawyer can conduct property and title searches to ensure the seller is legally entitled to sell the property. If you’re purchasing a strata property, they will make enquiries to the strata body corporation in relation to levies and insurance.
Many financial institutions charge a fee simply for applying for a home loan or to set up your home loan account. Other common fees include valuation fees, document preparation fees, bank cheque fees and monthly or annual account services charges. These fees will normally be deducted from the amount of money you borrow, before funds are made available to pay for your new home. Fees can vary significantly between lenders, so do your research to find out exactly what fees and charges you must pay.
Also commonly known as ‘Transfer Duty’, transfer duty is a tax based on the purchase price of the property. It is levied by the State Government to cover the costs of transferring the title of the property.
In Perth and throughout Western Australia, qualified first home buyers buying properties valued at $430,000 or less are not subject to transfer duty.
Visit the WA Department of Finance for more information and to view transfer duty rates in Western Australia.
Building and pest inspections is insignificant compared to the potential cost of dealing with a major building or pest control issue.
There are various types of building inspections available and the cost increases the bigger the property and the more items you have checked. The investment can be well worth it in the long run as it could uncover unknown issues and you may be able to renegotiate your offer price.
In Perth, it is common for most real estate agents to recommend buyers get a termite inspection as a condition of the offer and acceptance.
If you are purchasing a home with a swimming pool and you want to avoid costly repair bills in the future, it is equally as important to get the pool, its equipment and safety barrier inspected.
Technically, the property is the responsibility of the seller up until settlement date, but it’s recommended that buyers get insurance from the time the seller signs the contract, just to be on the safe side. While it’s not legally required, your mortgage lender may expect you to take out insurance before settlement.
Banks and other financial institutions will charge a one-off insurance fee if your home deposit is less than 20% of the property value. This is generally 1-3% of your loan amount and provides insurance to covers the lender. To avoid paying this fee, you will need to save a larger deposit or offer additional security.
Before moving into your new property, you may need to set up and pay for any utilities and services to be connected. They are likely to be one off payments and, for Perth buyers, can include:
Gas – Klleenheat or Alinta
Electricity – Synergy
Telephone
Internet
Cable television – Foxtel
In Perth, your conveyancer will assist you in setting up your new water account with the Water Corporation as part of the settlement process.
If you take out a mortgage (home loan) to fund the purchase of your new home, the bank may register a mortgage against your property to secure the loan. There is a one-off Landgate registration fee to register a mortgage.
On average it takes 6-9 months to find a house, make an offer, have it accepted, get finance approval, and settle
Buying an established house vs building a new home means there is often work needed immediately
Misc & Ongoing
This will probably be your largest ongoing cost when buying an investment property. Your mortgage repayment will vary depending on the amount you borrowed, the term of your loan, loan type, and any loan servicing fees.
Home and contents insurance covers your house and possessions against damage caused by an insured event such as fire, flood, storm or theft. It includes new-for-old repair or replacement and the option to cover personal valuables like your mobile phone, laptop, or bicycle.
Most removalists in Perth charge an hourly rate. The price varies based on the size of the truck and number of removal staff. Check whether insurance is included and if there are any extra charges, such as a call out fee. Also note that hours are calculated from the time the vehicle leaves the depot to when it returns, not when it arrives and leaves your home.
When building, you pay interest only on what you’ve drawn down from the bank
There are many things that can go wrong with a property. The walls might need a fresh coat of paint, you might need to replace a broken fence, or fix leaky pipes. It’s important that you have funds set aside for these maintenance expenses.
Regular servicing ensures your air conditioning heating and cooling functions are working correctly. They’ll also check the airflow, check all functions of the air conditioning are operational, check the electrical connections, check the outdoor units and in good working order and that the fan is operational.
They are paid on an annual basis. Date of settlement you will pay prorata rates for the year. The rate levied on a rental property will vary depending on the local government area.
You’ll get a bill every 2 months. Each bill includes: service charges (water rates) and. water use charges (how much water a customer has used). Consider ways to save on water through low flow appliances or installing a water tank.
This can vary widely depending on your provider and if you have solar power. It pays to shop around.
Internet/phone plans will vary depending on what is available in your area.
Set-up and subscription fees varies depending on the services you subscribe to.
Investment property costs
Letting and leasing fees in Perth are usually two weeks rent plus GST or 2.2 weeks rent. The charge covers the cost of finding and securing a tenant for a vacant property and includes: an assessment of the rental value. conducting inspections with prospective tenants.
Approximately 4%. You will pay this if you hire a property manager for your property. In return for the money, they will market your property, dealing directly with prospects and tenants, collecting rent, handling maintenance, tenant complaints and any evictions. The cost of hiring a property manager will depend on which company you use.
Rule of thumb is to allow $400 month. There are many things that can go wrong with a property. The walls might need a fresh coat of paint, you might need to replace a broken fence, or fix leaky pipes. It’s important that you have funds set aside for these maintenance expenses.
You will need to pay body corporate fees or strata fees if you own a unit or a townhouse that’s within a complex. These fees are used to maintain amenities within the building such as swimming pools, gardens, lifts, or a gym. Keep in mind that more features will mean higher body corporate fees.
Tax can be a costly thing when investing in property, but when done right it can be your best friend. That’s because many of the above costs mentioned can be tax-deductible, as is the depreciation of your property and some of its contents. If you decide to sell your property, you may incur Capital Gains Tax, which can also be incredibly costly.
As a property investor, it’s important to consider the types of insurance you will get. Of course, you should insure the property, but you may also want to get a higher level of cover with landlord’s protection insurance. This covers your property against loss or damage caused by tenants, whether it is by accident or deliberate. Depending on your provider, landlord’s insurance can cover you for accidental or malicious damage to both the structure of your property and any contents that you may have leased to your tenants for their use.
Utilities are a common ongoing cost of living in a property and include things like electricity, gas, and water. You can offload these costs to your tenant if you wish, but if you’re keen to attract tenants you may consider incurring the cost yourself.
Water is often negotiated depending on pools and gardens requirements.
Such as pool inspections – The law requires that WA local councils inspect private pools in their jurisdiction at least once every four years to ensure they have complying fences or other safety barriers.
Selling
When you sell or dispose of a rental property you may make a capital gain or loss.
A capital gain or loss is the difference between what it cost you to obtain and improve the property (the cost base) and the amount you receive when you dispose of it.
Professional assistance by a suitably qualified person is needed to legally transfer ownership of the property you are buying. A settlement agent or lawyer can conduct property and title searches to ensure the seller is legally entitled to sell the property. If you’re purchasing a strata property, they will make enquiries to the strata body corporation in relation to levies and insurance.
What are home loan break fees? If a home loan is paid out during a fixed interest rate period you may be charged a ‘break fee’ or ‘early repayment fee’. These fees can be high, so you need check with your current lender on these fees when deciding whether to refinance your existing home loan.
Closing costs are processing fees you pay to your lender when you close on your loan. Closing costs on a mortgage loan usually equal 3 – 6% of your total loan balance.
As a buyer of a property you will not have to pay any real estate agent fees. However, if you are selling a property in order to purchase another and are using a real estate agent, you will need to pay your agent’s commission, usually as a percentage of the sale price.
In Perth, real estate agent commission rates are generally between 2-2.5%.