Buying An Old vs. New Property: Which is Better for Property Investment?

It’s a common question with no one-size-fits-all answer: when investing, should you buy an old property or a new one?

Both options come with distinct advantages and disadvantages, and even experts can be divided on which is best. Ultimately, every property should be assessed individually. Some older homes may outshine their newer counterparts, and vice versa. However, there are some general guidelines worth considering as you weigh your options.

The benefits of buying an older property

One of the most appealing aspects of older properties is their typically lower purchase price compared to newer homes. This affordability can offer investors a strong starting point, especially if there’s potential to add value through renovations. If these upgrades are cosmetic rather than structural, they can significantly boost the property’s market value without breaking the bank.

Another advantage is financing. Lower purchase prices often result in fewer shortfalls during bank valuations, making it easier to secure financing. Older properties also come with the benefit of full inspection. Unlike buying off-the-plan, you can thoroughly assess the property’s condition and quality before committing.

Finally, buying in established areas provides a clearer understanding of market trends and comparable sales, offering greater certainty around the property’s value - both now and in the future.

The benefits of buying a new property

New properties can range from house-and-land packages in outer suburbs to redevelopments closer to the city or off-the-plan apartments and townhouses. While these vary in investment potential, they often come with unique advantages.

Tax depreciation is a standout benefit of newer homes, helping investors reduce holding costs. Additionally, significant stamp duty concessions can translate into thousands of dollars in savings.

New properties generally require less maintenance, which can lower ongoing costs. They also tend to attract higher rental yields and experience lower vacancy rates, making them a strong option for rental investors.

The drawbacks of older properties

While older properties have many positives, they can also come with hidden risks. Structural issues may require costly repairs, and easements or caveats on the title could limit your ability to renovate or subdivide. It’s crucial to engage building inspectors, surveyors, and solicitors to ensure your investment is in good condition and free from legal complications before proceeding.

The drawbacks of new properties

New properties aren’t without their challenges. In areas with high supply, capital growth can stagnate, and rental demand may weaken. To mitigate these risks, focus on locations with limited supply and strong demand.

Another risk is the quality of construction. Some builders may cut corners to maximise profits, leading to potential defects or legal disputes. Research the builder’s reputation thoroughly before committing to any off-the-plan purchase.

When considering new apartments, be cautious of oversupply in the area, as this can make it harder to attract tenants or achieve competitive rental returns.

So, should you buy old or new?

There’s no universal answer because the right choice depends on your unique circumstances and goals.

If you’re budget-conscious and find an older property in a desirable location that’s structurally sound and ripe for cost-effective renovations, you could be onto a winning investment. Conversely, if you’re seeking tax advantages and minimal upkeep, a new property could be an excellent choice - especially if it’s in a high-demand, low-supply area and built by a reputable developer.

At Providence, we don’t just find properties – we uncover opportunities. By blending decades of experience with rigorous research, we empower our clients to make confident, informed decisions. Ready to start your property investment journey? Let’s find the right opportunity for you.