By selecting new homes instead of existing ones, savvy investors can save time and money while benefiting from numerous advantages.
2024 Investors’ Top 5 Property Benefits,
In general, investors strive for the highest returns with the least risk. Traditionally, existing homes were preferred due to their established value.
However, as homes age, they can present potential maintenance challenges. Consequently, many savvy investors are now choosing new properties to enhance long-term returns.
The 2024 housing market context
By mid-2024, strong housing demand, tight rental markets, and renewed investor activity have shaped a dynamic environment for property investors.
Affordable markets are particularly notable, experiencing significant price growth and presenting unique opportunities for savvy investors seeking high returns.
Navigating these trends effectively is crucial. While “time is money” remains a key principle, a longer-term perspective also proves valuable.
New builds, despite a short-term income gap during construction, offer long-term benefits like reduced maintenance costs and improved efficiency.
Modern standards in new properties make them a potentially smarter investment choice for those aiming for sustainable returns in the future.
We’ve thoroughly explored the implications of new home investments for 2024 and the years to come.
5 Advantages of Investing in New Homes
Before exploring the new real estate market, investors need to grasp its mechanics.
There are various choices available, including house and land packages in newly developed neighborhoods or knockdown rebuilds in established suburbs.
1. Tax season offers potential advantages
New homes provide tax advantages, shorter settlement times, and reduced long-term maintenance costs, often making them more cost-effective than older properties.
According to Nick Allan, Sales and Marketing Manager at Domaine Homes, “Investing in a new home rather than an existing one offers significantly higher depreciation allowances.”
He added, “While older homes provide minimal depreciation benefits, new builds can allow investors to claim up to $10,000 or more annually in tax deductions.”
2. New estates often lead to substantial capital growth
New suburbs are appealing to investors and first-time home buyers alike.
The potential for capital gains is high if you enter the market early, before these areas gain popularity and rising demand increases prices.
New infrastructure attracts new communities as roads, shopping centers, schools, and job opportunities expand beyond the CBD to support growth.
Recently, the NSW government reformed planning laws to improve efficiency and speed up approvals. They invested $200 million to aid councils in developing needed infrastructure.
Mr. Allan stated, “We have 12 consultants in key growth areas of New South Wales who are well-informed about future infrastructure developments.”
He continued, “These consultants specialize in council compliance for housing, which varies by LGA, and they identify opportunities for top rental returns.”
Developments with high-quality amenities and accessible public transport are preferred over those lacking such features.
Additionally, new estate builds have pre-priced designs, reducing the likelihood of hidden costs compared to purchasing land outside new estates.
New estates offer comprehensive packages with clear upfront costs, minimizing surprises like extra development fees or unexpected site issues. This ensures a smoother process and greater peace of mind for homeowners.
Knockdown Rebuilds: Old Charm, New Perfection
Unlike existing homes, new homes offer buyers the opportunity to personalize everything, from floorplans to appliances and color schemes.
Additionally, a significant advantage of investing in a knockdown rebuild is that the neighborhood is already established. Therefore, investors do not need to wait for infrastructure to develop.
Moreover, Domaine Homes provides click-on options during the design stage, allowing buyers to choose from a variety of designs and make adjustments easily.
Mr. Allan explained, “Buyers might select up to a dozen options during the design phase. Consequently, if there are no custom modifications, these designs do not need to be redrafted or re-costed. Everything is pre-set.”
He further noted, “All our options are pre-costed for each click-on modification. Thus, we can deliver quicker builds because the designs are already in the system and known to our suppliers.”
4. Sustainability is baked in
Unlike homes built decades ago, sustainability now plays a vital role in new home designs.
Incorporating sustainable features not only reduces utility bills but also future-proofs the home.
Furthermore, renters are increasingly drawn to homes with lower living costs. Thus, features such as solar panels and BASIX certification, which ensures water and energy efficiency along with thermal performance, become especially appealing.
As a result, these attributes are attractive to both tenants and investors.
5. Comprehensive Service from the Start Saves Time
Comprehensive services, such as financial advice, investment location consulting, and color palette selection, simplify the home-building process.
Building a new home can be overwhelming. However, reputable developers make the experience more manageable by providing comprehensive services from start to finish.
Mr. Allan explained, “Our streamlined process allows color selection to take about 90 minutes on average, whereas it can take a whole day with other builders. Additionally, everything is pre-priced, so there are no surprise bills.”
4 key strategies for investors
Investors must be strategic to minimize risk and maximize growth opportunities, whether they are building a future home, investing through rentvesting, or expanding their portfolio.
Unfortunately, immediate returns on investments are uncommon. Therefore, property investment—like any other investment—should be approached with a long-term perspective.
1. Research and due diligence is crucial
Seasoned investors keep ahead of trends by purchasing in developing suburbs at reasonable prices, allowing properties to appreciate over time.
Researching high-growth neighborhoods and expanding infrastructure is essential for making informed investment decisions.
Tools such as realestate.com.au’s insights and PropTrack data assist investors in analyzing growth statistics effectively.
Most importantly, seeking independent financial advice tailored to your personal circumstances is crucial for successful investing.
2. Stay Informed About Government Incentives
Although there are fewer incentives for investors compared to owner-occupiers, opportunities such as the First Home Owner (New Home) Grant still provide benefits.
This $10,000 grant requires the buyer to reside in the home for 12 months before converting it into a rental property.
3. Maintain a Long-Term Vision
Investors should evaluate the growth potential of a suburb and construct homes with features designed to endure over time.
By investing in modern appliances, durable materials, and sustainable features, homes retain their value and attract future buyers.
4. Rental Market Appeal is Important
Investor success often depends on appealing to the local rental market. To attract high-quality tenants, homes should be conveniently located, reasonably priced, and equipped with modern amenities.
Properties situated far from essential services often face challenges in attracting tenants. Therefore, developments with existing amenities are generally more attractive as investments.
Moreover, older homes that are costly to heat and cool, feature outdated appliances, lack visual appeal, or require significant repairs are increasingly less likely to draw quality tenants.
