Your home is the culmination of your financial efforts, and at the same time, it represents a safety net in case of market fluctuations. You probably love your dwelling, and you imagined living here for the rest of your life. However, what was once enough for your subjective needs might now not suffice for the practical requirements of your close or extended family. Naturally, you probably welcomed new (small and adorable) family members who need extra space for daily activities. Likewise, your spouse is perhaps begging for a more extensive space for work-related activities. Unfortunately, however, the real estate market in Australia will hit you hard.
The major Australian cities, whether we talk about Melbourne or Perth, are facing a genuine housing shortage that shows no signs of slowing down. Since you are on this post, you are probably looking to relocate to a new area and wish to purchase a dwelling that meets the subjective desires of your loved ones. But you will need to pay a premium. The median price of homes listed on the Australian real estate market increases year after year, and these price changes don’t care about inflation or modifications in median wages. In other words, for most families in our country, purchasing a new home has become an unfavourable financial proposition.
There is Still Hope
A new job, an increase in daily commute, and a safer space for your children are all factors that will require a choice. Either you take out a new mortgage and leverage the expertise of custom home builders in Sydney, or you collaborate with granny flat constructors and increase the square footage of your dwelling by investing in an ADU. Both options present clear advantages over buying an already-listed property. However, what is suitable for your situation will depend on your financial possibilities and the plans you wish to implement. Why choose the services of custom home builders?
The median purchase price of market-listed Sydney-based properties has exceeded $1.6 million, which basically guarantees that for new owners, the real estate market has become unsustainable. Are you the owner of a house built in the last 20 years, and your residence is located in a popular neighbourhood, such as Newtown or Surry Hills? If so, purchasing a larger property should not be a significant financial problem. Yet, if you own a flat in a suburb like Wakeley or St. Johns Park, the prospects of finding a dwelling with increased square footage that matches your financial capabilities will decrease considerably.
A Flexible Choice with Long-Term Returns
Let’s assume you have decided to build your future dwelling from the ground up and personalise your property in accordance with your subjective preferences. In such a case, the services of locally known custom home builders in Sydney will be essential for your vision. Custom home builders are up-to-date with the building regulations active in NSW, and thanks to the professional relationships accumulated over the years, they can often find financially advantageous offers on building materials purchased in bulk.
On top of that, custom home builders are up-to-date with the latest building technologies relevant to NSW-based modern construction projects. Do you want to invest in an energy-efficient property that, in the long term, will probably bring you a significant return on investment? Then, the services of professional builders should be your priority. Plus, a custom home presents countless advantages. Custom-built properties can be significantly more cost-effective than homes listed on the national real estate market. In Sydney, the average size of newly built properties stands at 239 square meters, which, at a median construction price of $3,600 per square meter, means that the total cost of a new dwelling will be just over $860k.
But we have not included the cost of the land. In NSW, the average price per square meter of land is $1,505, a 30% decrease from last year. For a 450-square-meter plot, you will, therefore, pay just under $680k. So, the total cost of a newly built dwelling will be $1.54 million, which at first glance, might not seem like a huge difference compared to already-listed properties. First glances are not everything, though. Long-term, you should take into consideration the potential financial returns.
Consider the Maintenance Benefits
Newly built properties retain their value much better than houses older than ten years, and in the long run, they can be more cost-effective to own than older, less energy-efficient properties. Although the construction costs of new properties are, to put it mildly, bonkers, the house you are building now will probably require minimal maintenance and renovations in the next few years. With an older property, however, the maintenance history is a gamble, and you don’t know exactly when you will be faced with an unforeseen repair bill. It’s all fun and games till you find out you’ve purchased a ruin. Plus, since they can incorporate newer technology, such as high-efficiency solar panels or HVAC systems with smart inverters, newly built homes present significantly lower utility costs.
That said, custom houses are not the only option you have at your disposal. If you don’t want to take out a new long-term loan for the construction of a custom-built property, another option you have is to invest in granny flats. Also known as ADUs, granny flats can only be built adjacent to a primary property, and their maximum square footage cannot exceed 60 square meters. Therefore, in terms of size, granny flats are more restrictive than investing in a new property. Size is not everything, though, as the most significant advantage of ADUs is cost.
Think of the Long-Term Returns
A two-bedroom ADU will cost anywhere between $100k and $150k and will require significantly less paperwork to begin construction. Moreover, once completed, ADUs can bring a significant boost to the market value of your primary property and be used to generate supplemental rental income. What sums are we talking about? Well, the average weekly rent in NSW for newly-built units is $745. But let’s say you want to offer a competitive price and never face a shortage of tenants.
At $550 per week and with an occupancy rate of 90% per year, your rental income, after 12 months, should be around $26,000. In other words, if the ADU costs you $100k, then your investment should be covered in approximately four years. Plus, granny flats add an average of 25% to the listing price of dwellings. Was your house worth $1 million? If so, after the completion of the ADU construction, you can expect to sell it for around $1.25 million. At least in Australia, there is no better financial investment than granny flats. So, naturally, their popularity is rising, and more and more people are calling them the solution to our country’s housing crisis.
