Study reveals new homes need smaller mortgages in five states
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Photo by RDNE Stock project
New homes are proving to be the more affordable housing option in five Australian states, contrary to the common belief that new builds typically cost more than established properties.
Analysis by Money.com.au shows homebuyers in the ACT, Tasmania, South Australia, Western Australia and New South Wales are taking out smaller mortgages for new homes compared to existing properties.
The largest cost difference appears in the ACT, where the average loan for a new home is 20 per cent lower than for an established property ($525,991 versus $658,491).
Tasmania follows with new home loans averaging 12.5 per cent less than those for existing homes ($408,889 versus $467,208).
In South Australia, Western Australia and New South Wales, the gap is narrower but still favours new builds with mortgage sizes 6.6 per cent, 3.8 per cent and 0.30 per cent lower respectively.
Money.com.au’s Property Expert, Mansour Soltani, attributes this trend to land availability and regional affordability.
“Building a home can be a cheaper option in states where land is more affordable, particularly in growing regional markets. In contrast, established properties in high-demand metro areas come with premium price tags, pushing up loan sizes,” he said.
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Government incentives are also playing a significant role in making new builds more accessible in certain areas.
“Government incentives for new builds like stamp duty concessions, first-home buyer grants, and low-deposit schemes can make new homes the more cost-effective choice for buyers in certain regions,” Soltani said.
The research also identified three states where the opposite is true.
The Northern Territory shows the most significant ‘new build premium’, with average home loans for new properties 6.4 per cent higher than for existing homes.
Queensland follows with new build mortgages averaging 3.6 per cent more ($660,910 versus $637,835), while Victoria shows a smaller premium of 1.8 per cent on new homes ($641,882 versus $630,498).
For prospective homebuyers, these findings suggest that building new could mean taking on less debt in states where new homes command smaller mortgages, especially when combined with available government incentives and competitively priced land in outer suburbs and regional areas.