Investment Property in Australia | New Vs Established Property

By Rich Harvey, CEO & Founder, propertybuyer.com.au

There's a long-held belief among property professionals that when it comes to securing impressive capital gains from investment property in Australia, buying established real estate trumps purchasing new or off-the-plan properties every time. But is this conventional wisdom true, or have we been overlooking opportunities to take advantage of shiny new homes and planned developments?

Having spent years analysing both sides of this equation for clients, I believe there are compelling reasons to consider both options — but my money is on the older, less glamorous properties that others might overlook.

Here’s why:

The appeal of new and off-the-plan

Let’s first look at the appeal of both brand-new and off-the-plan real estate.

Some investors are drawn to off-the-plan purchases for what seems like a logical reason: they're buying at today's prices with the hope that property values will increase during the construction period. The theory is that by settlement day, they'll enjoy an instant equity boost.

This speculative approach carries significant risks that many buyers don't fully appreciate. Firstly, markets don't always move upward in the short term. During periods of oversupply, which we've seen in various markets across Australia in the past, the value of your contract can decrease before you even take possession.

More concerning are the contractual protections developers build into their contracts to shield themselves from market volatility. These can include clauses allowing them to vary floor plans and square metres during construction, supposedly to "adapt to market conditions.

Then there are the infamous sunset clauses, which permit developers to cancel contracts if projects aren't completed within specified timeframes. I've seen unscrupulous developers deliberately delay completion to trigger these clauses when markets rise, allowing them to cancel existing contracts and resell at higher prices. It's a practice that leaves buyers high and dry after years of waiting.

There's also the quality concern. Once developers have your deposit locked in, there's a temptation to cut corners on materials and tradespeople to boost profit margins. You might think you're getting premium finishes, but the reality can be quite different.

The established property advantage

Buying established property removes what many call the "new car premium" from the property story. It’s that extra cost you pay for something that's never been touched. Just like vehicles, properties experience their steepest depreciation in the early years when new fittings, fixtures, and improvements lose their initial value fastest.

But the real advantage lies in Australia's fundamental property mathematics. Almost all long-term capital growth is a land story, while buildings depreciate. New houses have a larger proportion of their value tied up in the structure (which falls in value), whereas older houses derive more value from the land beneath them (which appreciates).

This is particularly evident with houses in established suburbs. That 1970s brick veneer on a decent-sized block might not photograph well for Instagram, but it's often the better long-term investment than the brand-new home on a compact lot.

Established homes also come with certainty. All the teething problems have been identified and resolved by previous owners, the leaky taps, electrical quirks, and drainage issues that plague new constructions have all been addressed in an older home. You know precisely what you're buying because you can inspect it thoroughly, walk through every room, and get a proper building and pest inspection completed.

Why ugly can be beautiful

I have a particular fondness for what I call "ugly" property, those older, less aesthetically pleasing homes that make other buyers wrinkle their noses.

These properties suit long-term, patient investors perfectly. The rental markets are well-established, yields are often superior to new properties, and previous owners have already absorbed the depreciation hit. Most importantly, you're buying primarily for the land value, which is where Australia's long-term property wealth is created.

Think about it this way: that tired 1980s-unit complex near the hospital might not win any design awards, but it offers minimal body corporate fees, proven rental demand, and a substantial land component. Compare this to a gleaming new apartment where you're paying a premium for finishes that will date quickly and body corporate fees that seem to only move in one direction.

The key is identifying properties that deliver adequate rental returns to hold comfortably for the long term, allowing you to capture significant capital gains as the land appreciates and the surrounding area evolves.

This strategy isn't for everyone. It requires patience, a long-term mindset, and the ability to look past superficial appearances to see underlying value. You need to focus on fundamentals: location, land size, rental demand, and growth drivers rather than granite benchtops and stainless-steel appliances.

The most successful property investors I know aren't chasing the latest architectural trends or the most Instagrammable properties. They're buying solid, unexciting assets in good locations and holding them for decades.

While new and off-the-plan properties will always have their place in the market, established "ugly" properties often deliver superior long-term returns.

The next time a sparkling new development tempts you, ask yourself: Am I paying for substance or style? In property investment, ugly can indeed be beautiful, particularly when it comes to your bottom line.

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