Taking out a home loan is a common move for many Australians, and it’s one that requires significant attention. While careful consideration of the loan type and term is warranted, it’s also essential for buyers to ensure they contemplate their property purchasing options carefully.
One option is to buy a new property. New figures from the Australian Industry Group and the Housing Industry Association (HIA) indicate that new homes could continue to charm buyers from across the country.
Australia’s building industry expands
Following a period of lacklustre activity, the nation’s construction industry is most certainly back in full swing. This marks good news for those taking out home loans.
The Australian Industry Group/HIA Australian Performance of Construction Index (PCI) experienced a surge during September, lifting 4.1 points to a reading of 59.1.
Given that readings above 50 points indicate an expansionary period, this is certainly positive news for buyers across the country. The sub-sector of house building has led the charge, with a reading of 61.7 points. This places it ahead of apartment building (60.5 points), and commercial construction (58.4). The one sub-sector experiencing contraction was engineering construction (48.3).
However, the news is certainly peachy for the residential dwelling front, with affordability potentially set to rise with the influx of further properties.
The case for property
Even despite flat labour market conditions, the housing industry remains optimistic of what’s to come. According to the director of public policy at Australian Industry Group Peter Burn, a persistent increase in wage growth in the construction sector despite a slowdown in engineering construction and overall flat labour conditions indicates that “skill shortages may be beginning to reappear”.
“Continuing strength in house and apartment building and a consolidation of improved conditions in commercial construction outshone a further, modest contraction in engineering construction in September. In positive signs for the remainder of the year, new orders were strong in the three expanding sub-sectors and employment grew very solidly,” Mr Burns said.
It’s clear the sector is doing well, but what is the benefit for buyers in seeking out new, rather than existing properties?
The pros and cons of buying new property
There are advantages and disadvantages to buying new, which buyers of all stripes should pay attention to. With regards to the positives, there are a number of things to bear in mind:
- Pick a property with all the features you want, such as walk-in wardrobes
- Potentially better insulation and structural integrity
- Less maintenance
- In some states, the First Home Owner Grant will soon apply to new homes only
- May have a comprehensive warranty
That said, there are cons to buying a property brand new, such as:
- If you’re buying in a popular city, you may have to buy in an outer suburb
- The design may be in-trend now, but less so in a decade
- Possibly having to wait for some time if you buy an off-the-plan home
Regardless of your purchasing intentions, be sure to use a home loan calculator to ensure you’re not borrowing more than you can afford to pay back.