Building vs Buying: Why building a house in Sydney is the smart alternative to buying an existing home
For decades, the idea of building a new home was seen as a luxury, but with property prices skyrocketing over the past five years, a new build in cities like Sydney has become a more attainable and attractive option for many Australians.
In the past 10 years alone, average property prices have increased by a whopping $552,300 across New South Wales, while in Sydney the cost of buying an existing home has increased by 146.4%.
Some of the pitfalls of purchasing an existing property in Sydney include design flaws such as poor drainage, outdated or impractical floorplans and the need for expensive repairs, which can quickly add tens of thousands of dollars to your house price. Not only are these issues eliminated with a new build, but you’ll also have the freedom to choose the layout, design and features of your home without compromising on practicality or style. Depending on your suburb of choice, building a new home on an empty block can be more affordable than purchasing an existing property.
With its rich history, world-class amenities and iconic landmarks, Sydney is an attractive place to build for Australians of all ages.
Whether you need a larger home for your growing family or you’re chasing your dream design, we’ve put together the ultimate guide for everything you need to know about building a house in Sydney.
The benefits of building a house in Sydney
Sydney is a sought-after city and getting a foot on its property ladder is a priority for families and property investors alike. Whether you’re upgrading or settling down, there are several reasons to choose Sydney for your next property build.
- High property values — In 2021, house values in Sydney grew by 25.8% compared to the previous year, making it Australia’s most expensive capital city and most sought after property market. Sydney’s housing market is forecast to grow an additional 7% by the end of 2022.Demand is high for quality new builds, especially in Sydney’s inner suburbs. Outer suburbs are also popular for buyers due to their convenient access to the CBD. Well-located suburbs in the Sydney region are more resistant to falling house prices than areas in smaller cities.This means there are a wealth of opportunities for you to future-proof yourself and your family by building your new home in one of Sydney’s sought after areas.
- Employment growth — Sydney is still considered the financial centre of Australia due to its wealth of employment opportunities in professional industries. Employment is one of the key driving factors in the city’s ongoing population growth. Each year, there’s a steady flow of new positions in growing and established industries like finance and tech. This makes building a house in Sydney ideal for anyone looking to stay in a location with more diverse job positions in their field. It also keeps families with older kids in reach of new opportunities in the city.
- Quality of life — When researching whether to build your new home in Sydney or elsewhere, most of the discussion is focused on the financial benefits of the city. However, quality of life and convenience is often neglected. Sydney is known for its infrastructure, with convenient transport allowing you to cut back on commute times and petrol costs. If you want to live in a place with character, the city is populated with many historical buildings that give Sydney a sense of identity, as does its wealth of museums, art galleries and cinemas.City living provides convenient access to local cafes, restaurants and local markets, providing plenty of excitement to fill your downtime. Because of the region’s layout and convenient transport, it’s easy to balance your lifestyle between the nightlife and excitement of the CBD while living in a laid-back outer suburb.
How does building in Sydney compare to other cities?
Between Sydney, Melbourne and Brisbane, Australia’s three largest cities are currently dominating the market for new home builds. Families and investors alike are flocking to these areas for their high job density and the convenient mix of city amenities and suburban lifestyles.
In recent years, regional centres like Newcastle have experienced a construction boom. Population growth in these areas has been spurred on by infrastructure developments and growth in corporate industries, making the area more appealing to career professionals and families. This has made building in Newcastle an attractive alternative to building a house in Sydney, Brisbane or Melbourne.
Read on to see how each city can accommodate your new build and to answer the question, “how much does it cost to build a house in Sydney?”
Building in Melbourne vs Sydney
Known for their fast-paced lifestyles and bustling culture, Australia’s two largest cities, Sydney and Melbourne, share a healthy rivalry. Both continue to experience rapid population growth with Melbourne adding 832,124 people to its population in the past decade compared to Sydney’s 703,407. Melbourne is projected to overtake Sydney and become Australia’s largest city by the year 2046.
With larger populations come higher property values. Melbourne has shown most of its growth in new home builds in fringe suburbs while Sydney has shown balanced growth across houses and apartments in both the CBD and established suburbs.
| Lot size (sqm) | 393 ˅ | 454 ⧨ |
˅ Melbourne average lot size according to Oliver Hume
⧨ Sydney average lot size according to Core Logic
- Land values in Melbourne — Before you can build your dream home, you’ll need to find the right block of land. The first thing to consider when choosing between Sydney and Melbourne is the average lot price of both areas.
- Return on investment— It’s important to consider what you’re actually getting for each build. According to the 2019 Core Logic Land Report, the average lot size in Sydney was 454 square metres. That’s 27 square metres less than in 2016.
Oliver Hume place the average lot size in Melbourne at 393 square metres in 2019, a decline of 27 metres from 2016. The average lot size for both cities has continued to decrease year to year. While populations are continuing to grow in both cities, Sydney still has the edge when it comes to average property size.
So while the cost of buying a plot of land and building a home is more expensive in Sydney, you’re more likely to end up with a larger overall home. Extra space allows you to be more creative with your home design and to expand your home in the future. This also means that your property will likely be worth more in the long run.
Building in Newcastle vs Sydney
The property market in Newcastle is booming with house prices rivalling Sydney. Newcastle and the surrounding Hunter Valley region have seen substantial growth over the past few years with many families and young couples leaving Sydney for more affordable areas.
Population growth and massive housing demands have also made Newcastle a good alternative to Sydney when looking to build a property that will produce a high return when selling.
Newcastle provides many of the amenities available in larger cities like job opportunities, entertainment, beachside views and public transport with the recent introduction of light rail services in the CBD.
| Lot size (sqm) | 570 – 604 ˅ | 454 ⧨ |
˅ Newcastle average lot size according to HIA
⧨ Sydney average lot size according to Core Logic
- Land values in Newcastle — Newcastle lot sizes average 570 square metres while the Hunter Valley average stands at 604 square metres.
- Return on investment — Larger lot sizes mean bigger properties which creates more opportunities for you to add value to your new home. However, Newcastle’s housing boom is expected to slow down in 2022 and beyond as housing prices continue to go up by smaller increments. This is common across Sydney and Melbourne, though Sydney’s record of more consistent population growth will likely keep house prices higher for longer.
Building in Brisbane vs Sydney
Brisbane has become an unexpected over-achiever when it comes to the Australian property market. With demand for housing rising in the more expensive Sydney and Melbourne regions, Brisbane has grown in popularity due to its lower cost of living and more affordable house prices.
| Lot size (sqm) | 434 ˅ | 454 ⧨ |
˅ Brisbane average lot size according to RealEstate.com.au
⧨ Sydney average lot size according to Core Logic
- Lands values in Brisbane — The average lot size was estimated to be 434 square metres as of 2018, a reduction of 27.8% from the previous decade. So while Brisbane’s blocks of land are more affordable than Sydney’s, they’re also smaller — and current projections see Brisbane lots continuing to shrink in the coming years.
- Return on investment — Though property prices are predicted to increase as more people migrate away from Sydney, Brisbane is currently experiencing a housing oversupply. This has made property prices stagnant in the area with significantly less growth than Sydney, Melbourne and Newcastle. Less demand means less return on investment for your property.
While this is expected to change in the near future, it means that you’ll have to wait longer to see your property value rise. It also means that Brisbane is unable to provide the same market security as larger cities like Sydney, where housing is expected to grow in demand for the foreseeable future. Market trends indicate that if you’re looking to build a future-proof property for your family or investment portfolio, Sydney is still the safer option.
What to consider when planning your build in Sydney
Visit display homes
Display homes allow you to see a pre-constructed version of a home design and are a huge time-saver when planning your build. In a display home, you can see the quality, practicality and look of the home design and visualise its suitability for your new home.
When visiting a display home, focus on the floorplan and compare its dimensions to your land. Visiting a display home that will fit your plot will give you a sense of how your build will fit your vision.
At Montgomery Homes, we offer virtual tours which allow you to explore a 3D version of your new property from the comfort of your own home. Take a tour of one of our architectural home designs today!
Establish a clear time frame
The first thing to consider when building a new home is time. While a quality home builder will ensure things run smoothly, building a new home can be a time-consuming process.
The time it takes to build a home depends on the size and complexity of your construction as well as your location. We recommend talking to a home builder familiar with the Sydney area to get an estimate of how long your build will take.
Cheaper stamp duty
Whether you choose to build or buy, there’s always stamp duty to consider.
One of the benefits of building a new home on empty land is that the cost of stamp duty is reduced. Unlike buying an existing home, you only need to pay stamp duty on the land itself —there’s no ownership transfer required. Instead, the cost of stamp duty is calculated based on the value of your land.
Depending on your location and the value of your land, this can reduce your overall building costs by tens of thousands. That money can be invested in luxurious upgrades to really make your new house feel like a home!
Consider house and land packages
House and land packages are a great way to save time and money on your build, allowing you to secure a plot of land and a beautiful home design at the same time. They’re a simple, stress-free solution that removes the need to negotiate with multiple vendors or wait for separate quotes to come back. Plus, you know the home design will work with your block.
House and land packages are generally more affordable than purchasing land and arranging home construction separately — plus, the total cost of the land and the construction costs are bundled together into one affordable package, giving you a clearer indication of the total cost.
Choose the right builder
Over 180,000 new homes were built in Sydney in the past five years alone. With so much construction in one area, it’s important to find a builder who can fulfill your unique requirements and who understands the idiosyncrasies of building in Sydney.
We recommend looking for builders with an established track record and experience in the industry. The right builder will be able to build on any type of land including sloping sites and narrow blocks. This is especially important if you’re building in one of Sydney’s densely populated inner suburbs.
Great areas to build in Sydney
Not sure where in Sydney to build? We’ve put together a guide to some of Sydney’s hottest areas for new home builds.
Box Hill
Located 42km northwest of the CBD, Box Hill has quickly become one of the more desirable options for buyers looking for an up and coming suburb. With close proximity to train stations and a mix of private and public schools, Box Hill is expected to be a popular choice with young families. The region is set to expand with more convenient amenities like shopping centres on the way. We recommend Box Hill if you’re happy to wait a few years for this expanding suburb to reach its full potential.
The median property price in Box Hill is $1.12 million, with affordable house and land packages available in one-storey and two-storey options. Get inspired with one of our premium Box Hill display homes, like the stylish, cutting edge Cayman 287 build, made with exposed brick, wood and metals to create a chic, modern atmosphere.
Leppington
Leppington is another up and coming suburb located 55km southwest of the CBD, giving you easy access to the city without sacrificing lush suburban greenery. The infrastructure in Leppington has been radically improved over the past decade, with improved shopping and transport making the area more accessible for families looking for room to expand. The median property price in Leppington sits at $1,000,000.
House and land packages are available in urban community estates like the community-focused Emerald Hills, including easy access to parks, schools and public transport.
Marsden Park
At a median property price of $1,006,500, Marsden Park is an affordable residential suburb for young families and established families looking for room to grow. Placed 47km from the CBD, Marsden Park features a mix of family-friendly parks and sports fields as well as convenient amenities like shopping and cafes.
Building in Marsden Park is easy with a Montgomery Homes house and land package in the serene Elara Estate. Our Marsden Park HomeWorld display homes are designed with open floor plans and spacious bedrooms for the modern family, with two of our most popular builds — the classic, all-rounder one storey Avalon 209 and the spacious two storey Brighton 229 — on display.
The easy and affordable way to build a house in Sydney
At Montgomery Homes, we’re experts at building beautiful homes across Sydney, Newcastle and the Central Coast. With over 30 years of experience, we pride ourselves on delivering quality homes, clear communication and value for money to our customers.
Whether you’re building a new family home or creating your dream oasis, our range of over 200 designs will have the right plan to suit your vision. Plus, our home designs can be adapted to meet your needs — a must-have when building in Sydney’s densely populated suburbs.
We specialise in working with complicated conditions such as downhill and uphill slopes, narrow sites and uniquely shaped blocks to deliver a stunning final product.
We also offer a selection of 25 display homes available for you to visit in New South Wales. Each one has been designed to suit all types of terrain from Port Stephens to Sydney, with display homes ready for viewing in Sydney, the Central Coast, Newcastle and the Hunter Valley. Our display homes will give you the best idea of what will suit your needs.
Contact us today and let us find the perfect design for your next adventure.
Browse our affordable Sydney home designs and find your dream house today!
Disclaimer: the information on this page is for general information only. It should not be taken as constituting professional advice.
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