Property investment wars: new builds vs old property

new builds vs old property

So you’ve decided to invest in property – great. But there are a few things you will need to consider before putting your investment plan into action. One of the biggest decisions you will face as a property investor, and a question that always has the Perth property market talking, is whether to invest in an older property or a new build. Whilst there are clear benefits to both, older properties notoriously take the preference over new builds when it comes to investments. Here are a few things to consider when deciding which Perth properties are worth your time and money.

Benefits of buying older properties

  • Clear demographic – One of the biggest benefits of buying older properties is they appeal to a clear demographic of buyers or potentially long-term tenants. Existing properties are often favoured by growing families as they are commonly located on larger blocks, providing more room for kids, large families and (of course) family pets.
  • Proximity to CBD – It makes sense existing homes tend to be in more established areas. For tenants and property owners, this means proximity to amenities, local schooling and (maybe) a short ride to Perth’s city centre. Many new homes, on the other hand, are often situated in Perth’s outer suburbs where there are generally more rental properties on the market. This often means lower rental yields due to high market saturation.
  • Market performance – Perth property investors often favour older properties as they tend to be stronger contenders in slower markets. These existing homes are also more comparable in the marketplace, allowing investors to research similar properties that have sold or rented in the area to get an idea of the value of their investment and the capital growth they can expect to achieve.
  • Opportunity to add value – Whilst established properties have a different (and often appreciated) aesthetic from new builds, they also present an opportunity for property investors to renovate and modernise to add value to their investment. If the area is later rezoned to increase population density, this may present another opportunity for property investors to maximise on value through subdivision.

Benefits of buying new builds for investment

  • Tax depreciation benefits  –  Whilst Perth property owners are able to claim depreciation on any properties or renovations made after July 1985, new builds allow investors and property owners to take full advantage of depreciation benefits from the get-go to reduce the holding costs of their investment properties.
  • Lower maintenance – Generally speaking, established properties tend to require a little more TLC than brand new builds. However, modern builds and new developments increasingly include luxury additions such as swimming pools, theatre rooms and shared facilities – and as we know, luxury comes at a cost.
  • Builder warranties – The team at Rentwest recently met with Prime Projects  Construction to discuss what you should look out for when buying a new build. One of the biggest benefits that emerged from this was new builds often come with a period of builder’s warranty. This can cover things such as loose bathroom fixtures, cracks and plumbing issues. As a property investor, be sure to find out who built the property and which warranties may apply to your investment. Similarly, if your older property has recently undergone a makeover, make sure to find out if warranty applies to the renovations.

I’ve made my decision – what’s next?

When it comes to the classic property war between old and new builds, your final decision will come down to personal preference and your long-term investment strategy. Whichever decision you make, the most important thing from here on out is how you treat your investment. The property management team at Rentwest can make sure you get the most out of your investment property after the initial purchase. From rental rates to long-term investment strategy, our Perth based property management team can help you make the best decisions for your Perth rentals.

For more information about Rentwest’s property management solutions, contact the team on 08 9314 9888 or email us at rentals@rentwest.com.au.