When it comes to property investment, one of the biggest decisions you’ll face is whether to buy a brand-new property or an established one. But what is the smartest choice financially?
At OpenCorp, we’ve spent decades building and investing in property, and our experience shows that buying new wins almost every time. Here’s why.
The Reality of Established Properties
It’s easy to see why some investors prefer established properties. They like being able to inspect the home in person, visualise tenants living there, and appreciate the character of an older build. However, what they’re often focused on—the house itself—is actually the part of the investment that depreciates in value.
The land is what appreciates, and the house itself is just a structure that will require ongoing maintenance and repairs. Investors often get caught up in the aesthetics of a property, rather than focusing on long-term financial performance.
The Fear of Building
Many investors shy away from building due to concerns about:
- Construction delays
- Builder insolvencies
- Cost blowouts
While these issues can happen, choosing a financially stable builder with fixed-price contracts and completion guarantees mitigates the risk. And the upside? Investors who have built in markets like Perth have seen rental yields exceed expectations by as much as $200 per week, providing an incredible long-term return.
The Numbers: New vs. Established
Let’s break down the hard financial advantages of buying new:
Higher Rental Demand and Yields
A brand-new property is always more attractive to tenants. Given the choice between an older home with wear and tear or a pristine new build, renters overwhelmingly choose the latter. New homes rent faster and for more money.
Lower Maintenance Costs
Older homes come with hidden costs. A seemingly great established property can quickly become a money pit with unexpected expenses—roof repairs, plumbing issues, outdated electrical wiring, and more. A new property comes with builder warranties, mitigating or reducing maintenance costs significantly in the first few years.
Lower Stamp Duty
When you buy an established property, stamp duty applies to the land and the building. But when you build new, you only pay stamp duty on the land. That’s a major upfront saving that many investors overlook.
Depreciation Benefits – A Game-Changer for Investors
New properties offer significant tax advantages through depreciation.
- You can claim depreciation on both the building and fixtures/fittings from day one.
- In the first few years, this can add thousands of dollars back into your pocket.
- Older homes? The depreciation benefits are minimal or non-existent.
If you’re an investor who wants to minimise holding costs, depreciation benefits on new properties makes them a clear winner. Want to know the best investment opportunities for 2025? Book a free strategy session with our team today – we’re here to help!
