Building vs buying a house

You’re finally ready to become a homeowner—but there’s a fork in the road. One path leads to buying your home, and the other to building one from scratch. So, which one is the best option?

In this article, we dive into the pros and cons of building versus buying a property so you can decide which one suits you best. 

Is it cheaper to build or buy a house? 

One of the most important factors to consider for potential homeowners is the cost. Unfortunately, there is no clear and straightforward answer to which option is cheaper. It can go either way, depending on exactly what you want in a home and where you want it to be. 

According to the latest house price figures from the Australian Bureau of Statistics (ABS), the average house price in Australia is $1,016,700. The prices differ significantly at the state level. Here’s a quick breakdown of the average house prices in Australia: 

Source: Total Value of Dwellings June Quarter 2025 

As you can see, there’s a significant difference in median house prices between states and territories. If you’re buying a standard two-bedroom house in New South Wales, it would likely be more expensive compared to a similar property in the Northern Territory. 

Meanwhile, the median build cost in Australia, according to the latest ABS data, as reported in the Herald Sun, is $492,410. This is a significant increase of $22,500 since the last financial year. The increased cost of construction across the country can be attributed to high interest rates and rising costs of materials like copper pipes and fittings, fibrous cement products, and electrical cable and conduit. 

An overview of new construction costs per state is as follows: 

Source: ABS data analysed by HIA (Herald Sun)

Similar to average home prices, the median cost of building a new home changes depending on the location. New South Wales also has the highest prices when it comes to home construction. South Australia has one of the lowest home construction prices from the ABS data available, and it is significantly lower than the average home build cost in Australia. 

When looking at the cost to build versus buying a house, it may seem like building is much cheaper. However, construction prices don’t typically include the lot purchase. The cost of buying land affects the overall price of your home construction.

In the latest HIA-Cotality residential land report, the median lot price in Australia is $372,620, a 39.2% increase compared to 2019. There’s a decrease in overall land sales coinciding with the rise of residential land prices. Here’s a breakdown of land prices in the country per state: 

Source: HIA-Cotality residential land report 

In line with the price values and building costs, the state with the highest median lot price is also found in New South Wales. The median land price in Greater Sydney is almost twice as much as the average land price in Australia. 

The lowest median lot prices can be found in Greater Adelaide and Greater Hobart. Take note, residential land prices may change depending on the suburb. Keep in mind that vacant lots of similar size may have notable differences in price based on their location. 

Pros & cons of building a house 

Advantages of building a house 

Let’s discuss the pros of building. Of course, other than the appeal of something shiny and new, there are notable benefits to building a new home. 

Flexibility 

When you build your own home, you can customise almost every aspect of the design, from the floorplan all the way to the type of benchtops you’d like. You’re in control of the finished product, unlike with an existing build, which is more ‘you see is what you get’, unless you’re willing to fork up the extra dollars for a renovation. 

Building a property from the ground up lets you create a home that’s exactly what you want it to be. If you work from home, you can add in a home office; if you’re a movie fanatic, you can add in a home cinema. If you have the funds available, the options are endless. 

Make it green (energy efficient) 

As a part of the flexibility aspect, since you’re in total control of the finished product, you can choose to make your home as energy-efficient as you’d like. Whether this is by choosing LED lightbulbs, double glazing your windows to block out noise and reduce heat penetration, or installing solar panels and a solar hot water system.  

Making your home green can be expensive upfront, but saves you money on electricity and gas bills over the long term. 

Save on stamp duty 

When you build instead of buy, you only need to pay stamp duty on the land instead of the land and the property (as you do when buying a house). If you’re not eligible as a first home buyer to be exempt from stamp duty costs, buying land to build could end up saving you a lot. 

Drawbacks of building a house 

There are aspects of building a property that may not be ideal for some. Here are a few factors you need to keep in mind when building a house: 

Building a house takes time 

Buying an existing home means that you can generally move in as quickly as the month of buying the home. Unfortunately, when you choose to build, it’s going to take a lot longer than this. On average, it can take up to six months to build a brand-new house. Though it can be as little as four months or potentially more than a year.

Finding a good piece of land can be difficult 

Vacant lots aren’t as abundant as established homes. It may be difficult to find the perfect parcel of land, especially if you want to live in a certain suburb or are looking for specific community amenities.  This search could stretch out an already long process of building a process.

Newly developed neighbourhoods may have more choices when it comes to vacant land, but the services and amenities in the area may not be as ample as those in a more established suburb. 

Risk of additional costs 

Even the most thought-out and painstakingly planned budgets can change when it’s finally time to build the house. For example, if it storms for weeks on end and the builders aren’t able to get to work, this can end up costing you both time and money. Delays in the building process or the rising cost of materials can affect the total cost of your home build. 

Pros & cons of buying an established home 

Reasons to buy an established home 

There are notable benefits to buying an existing home, which include: 

Convenience 

Unlike the steps involved in building a house, buying an existing property can be easier. Online real estate sites make it easy to find what you’re looking for— including the ability to search by price, location, bedrooms, carparks, and more. Though it can still take some time after you inspect and sort out your finances, it’s typically a much simpler process than building a brand new one. 

Plenty of established suburbs to choose from 

It’s easier to find the home you’re looking for, exactly situated where you want to live. From generic searches of a particular region all the way down to individual suburbs, you can be as specific or broad as you’d like in where you want to live. 

Less uncertainty 

When you buy, you know exactly what you’re getting. However, when you build, it is somewhat up in the air what the home will look like in the end (though you will have a pretty good idea). There is the possibility that things can go wrong with a new build, but when buying, you have already seen the finished product. 

Faster process 

Building a brand new house can take months, whereas buying an existing property is much faster. Once you’ve found it online and inspected it, you could choose to settle within 45 days of the contract date. Rather than six months for a new build, you can be moved in within just a month or two if you choose to. 

Drawbacks of buying an established house 

There are cons to buying an existing property that should also be considered. 

No say in floor plan 

Though more convenient and less uncertain about the end product, buying an existing property means you don’t have the same say in the design of the house. Because it has already been built, you can’t choose to make customisations to suit your lifestyle or preferences. While you can renovate or make alterations once you own the home, this can be costly and time-consuming. 

It’s been lived in before 

Since it’s not brand new, it has already been lived in by someone else. This could leave you subject to fixing general wear and tear, like old paint or piping, or even higher electricity bills due to poor insulation and less energy-efficient options. 

Higher stamp duty cost 

Buying means that you will be paying for both the land and the property sitting on the land. This will inevitably mean higher stamp duty costs, which can end up costing thousands of dollars more than just buying the land. 

Which one should you choose? 

It all depends on what you want out of your home and what you can afford. Before making a decision, it’s best to weigh the pros and cons first and understand what each option entails. 

Whichever one you choose, loans.com.au has home finance solutions for you! Our loans offer competitive rates and incredible features that can help you save money and own your home sooner. For more information, call us at 13 10 90 or start your application online today! 

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