Building Your First Home

The great pleasure of building your own home is choosing what you want to suit your lifestyle. Building your home gives you more control on how the house is laid out and all its finishing touches. You also have more control over the building materials used. A new home is considerably cheaper to maintain.  With brand new appliances, plumbing, heating and air conditioning, you should be repair free for a good few years. 

Building your own home can take significantly longer than finding an established home to purchase. Most builders offer a fixed price contract option and this can include a guaranteed build time. You’ll also need to factor in weather related delays and the amount of time council approvals and design plans can take.

First Home Owner Grant

The current First Home Owner Grant applies to construction of a new house, unit or townhouse and to the purchase of a brand new established home that has not been lived in before.

At the time of writing, the current grant can be as high as $20,000 in certain states. The criteria vary from state to state and change regularly. Check your state’s revenue office website for up to date information on the grant and the criteria (see page 23).   

Stamp Duty Cost

If you build a new home, you only pay tax on the value of the vacant block which can be a significant saving.

If you buy an established or fully constructed residential home you will be required to pay Stamp Duty on the entire value.

Stamp duty also varies from state to state. These examples are for South Australia based on the current situation (May 2020)

If you decide to build your first home, you can buy a block of land and build, purchase a house and land package or buy off the plan.

Buy a Block of Land and Build

You can buy land months or even years before you plan to build on it.  Land prices usually go up, so if you buy the land first it’s likely to be cheaper than buying the land for a house and land package in the future. This can give you more time to save for a bigger deposit and to plan for the house you would like to build.   If you already know what kind of home you want to build, you can look for a lot that will accommodate it. 

When you buy land to build you will need to check if your bank has a minimum period in which you must begin building. You’ll also need to ensure that the land is zoned for residential purposes and there is good road access and services like electricity and water connection and sewage.  In addition you will need to get soil surveys done before buying land to ensure that the soil is not contaminated.

As a land owner you’ll need to pay rates and other ongoing costs on the land.

Choosing a house and land package

House and land packages are usually offered as a total deal – you're buying the land and selecting the house design to be constructed on it. As it is a new home you can benefit from the First Home Owner’s Grant and you will only pay stamp duty on the land. 

The building company will assist with house plans that will suit the block with appropriate sun orientation and driveway placement, although there may be extra upgrades that you will have to pay for. The council approval process will also be much easier to navigate, and in many cases will already be in place.

A house and land package is usually part of a new community and may include new facilities like parks, medical centres and shopping areas. On the flip side, new estates are often constructed in the outer suburban areas, where employment opportunities and public transport may be limited.

Buying off the plan

Buying off the plan is buying a property based on the designs and plans provided by the developer before it is built. Most developers have a range of house designs that you can choose from and you may be able to choose the finishing touches such as wall tiles, flooring, paint colours and appliances.

Developers will often sell properties off the plan in order to fund construction. A minimum number of properties may need to be sold before building on your property will begin. Most contracts will also have special conditions that allow the developer to cancel the contract under certain conditions. This is often known as the “Sunset Clause”. It protects the developer if they run over time with construction of the development. If a developer does default on the sunset clause you will get your deposit back.

A deposit is normally paid when the contract has been signed and the balance becomes due when the property has been completed. Buying a property off the plan can be cheaper than buying an existing house but there are things that should be taken into consideration before you decide.

Buyers only have to pay a 10% deposit (sometimes even less) to secure the property and as it is a new building, you can benefit from the First Home Owner Grant.

Whilst you may be able to view what your new home will look like at a display property, be aware that these are usually the upgraded versions of the property, therefore it is a good idea to review the contract thoroughly to see what is included. Most off-the-plan properties are required by law to include some sort of structural warranty for the build.

Keep in mind that most new developments of apartments and townhouses come with higher Strata Levies. These are your portion of the fees to cover the cost of management of the common areas such as the lifts, gym, lobby and general building maintenance.


We’re here to help you

Dealing with banks can be a stressful experience but rest assured that our mortgage broker based in Glenelg (but our mortgage broker services the entire Adelaide Metropolitan area) can help you make the right decision about your mortgage. We will guide you at every stage of your loan process.

Contact us on 08 8376 0455 or drop into our office at 593 Anzac Highway, Glenelg SA 5045.


Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. Information in this article is correct as of the date of publication and is subject to change.