Benefits of buying a new home in Victoria

 

Love the smell of  a new home 

 

The benefits of buying a new home in Victoria range from access to infrastructure to taxation. The Victorian government’s target of 800,000 homes in the next decade aims to address the extreme housing shortage in Victoria. Indeed, Australia has a housing shortage and all state and territory governments are grappling with this national problem.

 

According to the Grattan Institute Victoria needs to build approximately 11 homes per 1,000 residents per year will be challenging with labour and trade shortages. In its Building and Construction Industry Forecasts for Victoria through to 2028-29 the Master Builder’s Association (MBA) warns that national workforce shortages continue to be the biggest challenge to the industry, which it says needs half a million new workers between now and 2026.

 

Addressing the trade shortage means we need foreign workers which is incongruent with immigration policies. This problem is further exacerbated by the need to house the increased number of immigrants while building new homes. A conundrum most of the Western world is now facing largely due to the decreasing birth rate. Either way, new houses will be built and the advantages of their construction are clear.

 

Most importantly the inner-city infrastructure can be fully utilised. Large regional centres like Geelong also are set up for a denser living. Access to work and family is also important it will allow young people to live close to where they grew up. Many affluent areas close to CBDs have aging populations and are distanced from families they also increasingly rely on. Buying new property also offers several advantages related to taxes and building benefits.

 

Tax Benefits

 

First Home Owner Grant (FHOG). Eligible first-time homebuyers can receive a grant of up to $10,000 for buying or building a new home in metropolitan Melbourne, and up to $20,000 for homes in regional Victoria.

 

Stamp Duty concessions and exemptions.  If you entered into a contract from 1 July 2017 and the dutiable value of your property is $600,000 or less you are exempt from paying Stamp Duty. If your home value is between $600,001 – $750,00 the State Government has announced a sliding scale of concessions for purchasers.

 

Off-the-plan concession. Buyers of off-the-plan properties may be eligible for a concession on stamp duty. This means stamp duty is calculated based on the value of the land and construction at the contract date, which can result in significant savings.

 

Building benefits

 

Customization. Buying a new home allows customization to suit personal preferences, including layout, design, and finishes. This means you can create a home that meets your needs and tastes.

 

Modern amenities and technology. New homes are often equipped with the latest technology and modern amenities, such as energy-efficient appliances, smart home systems, and sustainable building materials, offering long-term savings on utilities and maintenance.

 

Builder warranties. New homes come with builder warranties that cover structural defects and other issues for a specified period, typically seven years. This provides peace of mind and protection against unexpected repair costs.

 

Energy efficiency. New homes are built to current building standards, which often include energy-efficient designs and materials. This can result in lower energy bills and a smaller carbon footprint.

 

Lower maintenance costs. Everything in a new home is brand new, reducing the likelihood of needing immediate repairs or replacements. This translates to lower maintenance costs in the early years of ownership.

 

Financial Benefits

 

Depreciation benefits. Investors can take advantage of tax depreciation on new homes, claiming deductions on the wear and tear of the building and its fixtures and fittings. This can significantly reduce taxable income and increase cash flow.

 

Higher rental yields. New homes tend to attract higher rental yields due to their modern features and lower maintenance requirements, making them attractive to tenants willing to pay a premium.

 

Government incentives

 

HomeBuilder Grant. Although the HomeBuilder program has concluded, past incentives under this scheme provided significant financial assistance to eligible owner-occupiers for building a new home or substantially renovating an existing home.

 

 

 

The hidden costs of buying your first home in Victoria

 

  • Legal fees can range from anything between $500 and $3,000, depending on the complexity of contracts.
  • Applying for a loan can incur a fee depending on the lender – ask upfront.
  • Valuation fees may set you back around $300-$500.
  • Borrowing more than 80 percent of your new home’s asking price means there will be mortgage insurance. This one-off payment can amount to $10,000 and only insures the lender.
  • Property inspections cost around $300-$400 and strata reports are about $200.
  • Council rates and strata fees begin from settlement and will set you back between $500 – $800.
  • Moving costs range from $200 for a few household goods to $3,000 for more bedrooms and larger families.

 

Contract of sale

 

Once you purchase you need to enter into a contract with the seller and that is the contract of sale. The contract includes vital details about the transaction and sets out the information and obligations of both parties – included are:

 

  • contact details (including addresses) of the seller, buyer and others involved in the sale;
  • how and when the deposit is paid, and where it will be kept;
  • the time and date of the final settlement, and when the title will be transferred;
  • the length of the cooling-off period (in Victoria, this is three business days);
  • conditions of the sale, such as whether or not it is subject to finance and
  • conditions that need negotiating – particularly if the seller is a developer.

 

Buying a new home in Victoria offers numerous tax advantages, building benefits, and financial incentives that make it an attractive option for both first-time homebuyers and investors. Many issues are delaying the construction from a shortage of trade and labour and the incongruent need to increase skilled migration.

 

New homes offer a plethora of opportunities but they are still subject to the established costs and a contract of sale. Overall, thorough research relating to a new home purchase is worth all the effort invested.