With Perth’s housing crisis going bad faster than milk left outside of the fridge in the middle of a hot day, it’s becoming harder for me to make a proper judgement on whether I should buy or build my first home.

Coupled with the honestly unhelpful housing advice I kept getting from my friends and family (I’m sorry, but it’s true!), I know I had to do some research on this matter.

Here’s what I found:

You should buy a house if you want to move in ASAP because the process is faster and easier. Meanwhile, you should build a house if you prefer having the creative freedom to design and enhance your home the way you want it.

Of course, a simple summary won’t suffice. Let’s further talk about the various pros and cons of buying or building a house in Perth.

Pros of Buying a House in Perth

Immediate Ownership

The biggest perk you’ll gain from this option is that by buying an existing house, you gain ownership of the property right away. This is a very good advantage, especially if you need to move into your new house immediately.

The process is so easy and requires significantly fewer steps compared to building a house. 

For starters, you only need to go through the process of finding a property you like. Once you negotiate the price with the seller and complete the necessary paperwork, the sale is finalised. 

At this point, you become the legal owner of the house. Unlike building a new home, there’s no waiting for construction or design phases. You can move in immediately after closing the deal.

Less Decision-Making Needed

Another advantage that I can certainly appreciate when it comes to buying a house is that there’s generally less decision-making involved. Since everything is already built, you already know what you’re getting into in the first place.

That includes the house’s design and layout, like room placement, window sizes, or architectural features. Even the finishes are already chosen for you, including the flooring, countertops, and cabinetry.

Houses for sale also tend to have their landscaping and yards already developed. That’s great, as you no longer need to plan a garden or decide on outdoor features.

And if you manage to find a house that’s already furnished, that’s a huge plus! You won’t have to worry about setting aside some funds to buy new appliances and furniture for your new home.

Chance to Settle in Established Neighbourhoods

Some of the most important factors you should consider before you move to a new location are whether it’s close to your job, has plenty of public transit options, and has a lot of amenities like schools, hospitals, and supermarkets.

Most of these can be found in Perth’s most established neighbourhoods, like South Perth, Subiaco, and Osborne Park. These places have a good number of houses for sale, but not too much empty land is still available.

And that, I believe, is one of the strongest cases for buying a house in Perth. Going with this choice means you’ll have an easier time finding a location that best suits your needs and lifestyle.

Furthermore, another amazing thing that we can all certainly appreciate about established neighbourhoods is their distinct character, shaped by their history, architecture, and residents.

If you’re someone who’s outgoing and loves to meet new people, then you’ll definitely love living in these kinds of neighbourhoods.

Lower Financing Costs

What’s also amazing about buying a house is that you can enjoy lower financing costs compared to building one. The process of getting a home loan is easier and, in most cases, only requires you to make a 20% deposit when buying a home.

Furthermore, if you decide to pay Lenders Mortgage Insurance, most lenders will accept you borrowing up to 95% of a house’s value. That leaves you with having to pay only the remaining 5% upfront before you can own the house!

It should also be mentioned that, in general, construction loans have higher interest rates compared to home loans (Savings.com.au). That’s because lenders find it harder to properly value a house that doesn’t exist yet.

Lenders also dislike the uncertainty that comes with building a house and the potential delays it might encounter, like bad weather, a lack of experienced builders, and material supply shortages.

Cons of Buying a House in Perth

Limited Customisation

Of course, the fact that you’re buying a house that has already been built means you’re already excluded from most customisation options. With most of the house’s features already in place, you can’t fully customise it unless you plan renovations.

This is especially true if you desire to add extra rooms or change your home’s layout. There are several architectural constraints you’ll have to consider, like the house’s foundation and load-bearing walls.

At best, the only things you can really customise in your new home are its appliances and certain fixtures like lighting and cabinets. Anything more than that will necessitate a complete house renovation or remodelling, which can cost a lot.

Maintenance Costs

This one is especially true if you’re planning on buying a house that is already several years old. Even if the former owner took extra care in maintaining the house, regular wear and tear can still weaken the house’s integrity over time.

Unfortunately, there is no other way to resolve this issue other than by paying any maintenance fees to repair any issues found in the house. 

That’s why I strongly suggest that you hire an independent building inspector first to see whether a house that you’re planning to buy has any issues that its owner forgot to mention.

If possible, also contact the company that built the property and see whether their warranty is still in effect for your new home.

Current Market Conditions

As I’ve mentioned in the introduction, Perth’s housing market is currently experiencing one of its worst periods in history for buyers. 

There’s a severe imbalance between the number of available homes and the number of people buying them. According to Mortgage Professional America, Perth had a 49% decline in houses for sale in December 2023 compared to December 2022.

That’s worrying, as the Australian Bureau of Statistics reported that Western Australia had the highest population growth in the country (3.1% increase) as of June 2023.

Unfortunately, these factors are why it’s possible for Perth to see a 20% increase in its median house sale prices by the end of 2024 (Australian Broker News). 

Make sure to weigh all your options carefully before deciding on buying a new home in today’s market.

High Government Fees

Another annoying thing you’ll have to look out for when buying a home in Perth is the exorbitantly high government fees that come with it. This is especially true when it comes to stamp duty since this tax is based on the purchase price of the property.

This means that the higher the value of the house you buy, the higher your tax will be. For homes that cost more than $350,000, you should expect to pay more than $10,000 in stamp duty.

Government fees are one of the reasons why opting to build a house is better. That’s because, as mentioned earlier, stamp duty is based on the property’s purchase price. Since empty land is cheaper, so too is its stamp duty.

Aside from stamp duty, there are also a lot of other smaller fees you need to pay to the government before you can purchase a house. That includes things like transfer document fees charged by Landgate.

Pros of Building a House in Perth

Customisation Options

The biggest positive that you can enjoy should you decide to build a house is that you’re in full control of what your dream home should look like. From its architectural style to the colour of its doors, everything can be done just the way you want it.

And what’s also cool about building a house is that your control isn’t only limited to the house’s design but also to what materials it should be built with. The ability to customise both design and materials allows you to be more flexible with your budget. 

However, it should be noted that the number of options you can customise is entirely up to the skill of your chosen home builder.

Can Be Designed for Energy Efficiency

Another amazing thing about building a house is that you can immediately turn it into an energy-efficient structure. 

With the revisions introduced to the National Construction Code, builders are now required to build homes that generate reduced emissions and consume less power.

Of course, the incorporation of updated environmental standards, including energy-efficient appliances and HVAC systems, can lead to higher building costs. However, the benefits it offers totally outweigh the initial expenses in the long run.

That’s because, unlike older homes, your newly built home consumes less electricity, leading to cheaper electricity bills. Furthermore, your reduced power consumption can greatly contribute to mitigating the effects of climate change.

Less Maintenance Needed

It’s no surprise that newly-built homes require far less upkeep when compared to older ones. That’s because their materials are still new and aren’t affected by wear and tear yet.

Furthermore, there are also the warranties and guarantees your home builder will grant you after constructing your house. These policies will provide free repairs and maintenance for any issues found while they are still in effect.

That’s why I strongly suggest you select a builder with lengthy warranties. They can ensure you won’t have to pay an additional dollar to keep your house in perfect shape for a long time.

Generous Government Grants and Loans

An important advantage in building a house you should also consider is the fact that there are plenty of generous grants and loans offered by the government, especially if you’re building your first home.

In a move to boost the state’s construction industry, the Western Australian government has launched the Building Bonus Scheme. 

It will provide a $20,000 grant for those looking to build or buy a newly built home. 

There’s also another grant called the First Home Owner Grant which grants up to $10,000 to first-time homeowners planning to buy or build a house.

Aside from homeowners, the state government has also decided to assist its construction companies by offering interest-free loans to help them complete unfinished homes (ABC News). 

Cons of Building a House in Perth

Time-Consuming

While buying a home involves only a short procedure that will last only up to a month at most, the opposite applies to building a home. Should you decide to build yours, be prepared to spend months or years to get yours finished.

That’s because there are a lot of hoops you’d need to jump before you can even start building a house. This stage, which involves things like designing the house and securing financing, can take you five months to finish.

Then, once the actual construction starts, you’ll find yourself having to spend an additional 12 months before you can move into your new home. And the time I’ve given is optimistic, as there are delays you might encounter during construction.

Get a better idea of the duration of construction here.

Potential for Decision Overload

Another potential downside you may encounter due to the amount of creative freedom you get to enjoy when building a house is the tonne of decision-making you’ll have to do throughout the construction process.

If you want your house to be built exactly the way you want it, you’ll have to involve yourself right from the very start. That means you yourself will have to choose the location, the design, the number of rooms, etc.

You’ll also have to make tough decisions when it comes to choosing the builder and materials to ensure they don’t go over your budget. Expect to receive sudden calls whenever a problem or delay arises during construction.

High Costs

Sadly, high prices aren’t a problem only house buyers in Perth face. That’s because building a house in the city is also an extremely expensive endeavour that you’ll need to seriously prepare for.

According to The Property Tribune, while house prices in Perth rose by 20% in 2022 and 2023, construction costs grew by 40% in the same period. 

Some of the key reasons why house construction prices have seen a meteoric rise are extremely high demand for new homes, a lack of enough builders in Perth, and a global supply shortage for building materials.

Hopefully, this issue gets resolved soon, as I feel a lot more people are going to suffer from the exorbitant costs it takes to have your own house today.

Limited Land Availability

Building a house can also potentially limit your chances of securing a good location in the city. That’s because most suburbs, especially those near the Perth CBD, are well-established, with most of their land already having a house built on it.

Any remaining lots that are still available in these suburbs are valued extremely highly and may put a serious dent in your budget, so buying them may prove to be unwise.

Still, there are a lot of newly-developed suburbs in Perth that you can still buy cheap land in. Some notable examples are the southeastern suburb of Armadale and the southern suburb of Kwinana.

These two suburbs are fairly good and have a lot of amenities available, like hospitals and supermarkets. The only problem is that they’re too far from the city centre, which is bad, especially if you have a job in the Perth CBD.