COVID-19 has been a game changer for Victoria’s property market, with many of us now rethinking what we want and need.
Internet speeds have become a consideration rivalling proximity to the CBD, developers and builders are working to design homes and apartments better suited for the post-virus world, and most of us have an acute awareness of the importance of our 5km community.
We’ve asked the experts to help you assess what type of home is the best bet for your next property move.
Get the home you want, when you want it. There’s a reason the majority of home sales in Victoria are for established property.
But Barry Plant chief executive Mike McCarthy said the benefits of a ready-made home extended beyond knowing what it would come with and how the garden looked.
“With established homes, by and large you know what neighbourhood you are buying into,” Mr McCarthy said. “You know the house that’s next to you and the people. And you probably like the look and feel of the street.”
And, despite high prices in many established suburbs, you are less at risk of overpaying in the eyes of your bank — who can force you to pay upfront the difference between the price you signed up for and their valuation.
“You are generally paying market value, particularly at auction — unless you have gotten really carried away,” Mr McCarthy said.
Established houses also tended to be on larger blocks than in a new housing estate, which meant there was scope to make your home work for you down the track either by subdividing the land, building a new home or developing the block, Mr McCarthy said.
But there are some words of caution. Overpaying is still a risk, and with generally shorter settlement periods there is less time to save your way out of trouble.
“And you will need to get your building and pest inspections done, so you know what you are buying and don’t get any nasty surprises,” Mr McCarthy said.
Off the plan
Both investors and homebuyers might consider off the plan, but there are vastly different benefits for the two groups, according to Castran Gilbert director Michael Lang.
“Owner occupiers get the benefit of time,” Mr Lang said.
This stretches from the potential for capital growth at the property before they have to start paying a mortgage, but also means they will have more time to save for the home.
“There are also stamp duty concessions … you only pay this on 25 per cent of the value of the apartment,” Mr Lang said.
For a $550,000 off-the-plan apartment, stamp duty for an owner occupier worked out to about $7000, Mr Lang said. For an established home with that price, paying the full 5.5 per cent in stamp duty comes up to about $30,000.
“And there’s also the chance to customise the design,” he said.
While investors might be waiting a while for a tenant and currently couldn’t claim stamp duty benefits, they were entitled to heavy depreciation benefits at tax time.
“You maximise your tax advantage, claiming depreciation on everything from carpets to fixtures and fittings,” Mr Lang said.
Do you like free money? There is up to $45,000 in government grants on the table in Victoria if you build a new home.
However, Porter Davis general manager sales and marketing Shaun Patterson said government cash was just one of the major attractions to build a new house.
“The big one is you don’t compromise,” Mr Patterson said. “Whether it’s in the greenfield (estate market) or a knockdown rebuild, you get what you want and no one has lived in it.”
This means you can dictate what rooms are in your home, how they are oriented and everything from the colours to the type of stone used for the kitchen bench is as you want it from day one.
Add to that a home warranty from your builder that requires them to repair things that go wrong in the first 10 years, as well as a minimum-standard six-star energy efficiency, and a new house has the capacity to save you money long term.
“They are cheaper to run … and they are low maintenance,” Mr Patterson said.
If you’re already in a home and your block size and local planning guidelines allow for it, you can also build your dream home at the same address you’ve loved for years.
Investors might also appreciate a raft of depreciation options, and that many tenants prefer a home that’s never been lived in.
But if time is of the essence, it will work against you with most new builds taking several months to take shape.