You’re on the hunt for a new home, but you live in a great suburb that’s going up in value. A modern home on your old block might be the perfect – and most profitable – solution for you.
The benefits of staying put.
Knocking down and rebuilding as an alternative to selling and buying new isn’t given enough credit.
For one, some mistakenly believe rebuilding is more expensive or more difficult than simply buying a new house in another location.
The true benefits go much deeper than convenience and cost, although we’ll get to the financial advantages in a moment. For example:
- You’ll stay close to work and keep the kids in their own school
- You can stay in your much-loved local sports and keep community connections
- You can stay in a place you know is safe and where you love your neighbours
- You can design a home that utilises the block best, since you have first-hand experience with living there
Who should rebuild?
It’s an option for everyone who wants to replace an unsuitable property on their current land (think growing families, or established suburbs with outdated homes).
But, it’s especially brilliant for those who live in high-growth, prime neighbourhoods.
So, let’s get to the numbers.
If we had to underline anything about knocking down and rebuilding in a prime suburb, it would be this:
Staying where you are means not only keeping your capital gains, but boosting it with an upgraded property, in a suburb with proven growth. That has the power to significantly impact your financial future.
Let’s say for example you bought a $250,000 property in Brisbane’s inner city suburb Morningside 15 years ago. It’s a 30-year-old home that today – because of its location – is worth the suburb’s median house price of $825,000.
Or you purchased in a fairly prime Gold Coast location like Burleigh, where house prices have risen over 20% in just five years, to a median house price of almost $1million.
If we go by historical growth, those types of prime suburbs are very likely going to continue increasing in value, and it’s ultimately driven by location and land.
Therefore, it may make financial sense to stay in the location that’s going to deliver maximum returns from long-term growth. That might mean a higher sale price later, or a significant rental income stream one day.
Essentially, a knock down and rebuild could mean you can have your cake and eat it too.
Cost-wise, you’ll also be able to:
- Save on buying and selling costs
- Save on stamp duty
- Still utilise applicable government grants, like HomeBuilder
You can use current equity to finance the rebuild
If your home has increased in value, you might be able to unlock equity in your land to boost your borrowing power.
Equity is the difference between the value of your home and the amount you owe, minus a lenders buffer (for example, if your property is worth $750,000 and your remaining loan is $400,000, you can access $200,000 equity towards your rebuild).
Tackling the knock down myth
Is knocking down a home an extra cost? Yes, but possibly not compared to buying new; you’re saving on land costs after all, and saving on real estate commissions and fees. What’s more, you’ll save up to $8750 in stamp duty, which will buy a stellar walk-in robe instead.
You’re also gaining by staying in a place that has likely already experienced capital growth just by being an established location – a gain you’ll lose if you build new somewhere else.
Locations to consider a knock down and rebuild
It’s always a good idea to do your research before you buy a home, and adding in a knockdown and rebuild is something to consider particularly if you live in a high growth area.
In South East Queensland, strong property values are typically found in central Gold Coast and inner city Brisbane, where many suburbs have historical high growth because of their proximity to the CBD.
Is a knock down and rebuild a good fit for you?
Our team are more than happy to chat with you about all the possibilities on the table. We fit people with their perfect home, whether it’s a brand new house and land package, or rebuilding a modern home right where you live now. It’s a personal choice based on your circumstances and goals.
Contact us for a friendly conversation with one of our team to find out if a knock down and rebuild might be the way forward for you.
