Chapter 8: Building vs Buying

Building a house or buying an "established" one, which is better?

To date, I have not received a satisfactory answer to this question. That is probably because folks who had done both are far and few between. That makes me more qualified (don't ask) than them to answer this alone.

Everyone from either side will somehow arrive at their decisions with similar points. The building camp claims these advantages of building a house from scratch: cheaper, customisable and you get everything brand new. On the other side, the buying camp claims these advantages: much lesser waiting time, no hassle dealing with builders/contractors and the WYSIWYG appeal. There is no wrong decision here. The only purpose of this post is to encourage you not to make your decision based on these guidelines commonly dished out by people. Don't get me wrong, I am not saying they are wrong. They can be right but they may not be. If the idea of getting your kid in a good Primary school guarantees a good future for him or her sounds frivolous to you, then stonewall statements from either camps should. It is very simple, because none of those statements should be cast in stone.

Allow me to elaborate. If spending as little money as possible is your prime purpose, you will probably choose to build, based on those general guidelines. However, you can still end up spending more to get a roof over your head if you make the "wrong" decisions, in this case a wrong decision means anything against your primary purpose. If someone wants a hassle-free experience and bought the "wrong" established home, he or she may end up dealing with more contractors than the building home experience to fix up the areas that isn't fit for living or to the satisfactory level. 

Also, the buying camp claims that if you factor in the time taken to build; and the rental fees you have to pay in that period, you could be better off in terms of spending less in the end by buying off the market. That is valid but not necessarily true. Some of us may be renting a room for $120 a week, which comes up to just over $6k a year, which is hardly a dent if you know how to build with less. On the other hand, if you are buying an established home in great condition, it will not usually come cheap. If you are buying one in bad condition, then you'll have to wait out while your contractors do up the place, which incurs in rental costs and you will have to deal with contractors yourself or even project manage. These are the factors folks from the buying camp wanted nothing to do with in the first place. Thus, my point is made, nothing is really cast in stone. It all depends how you do it.

If you are new to this and are confused, it is normal because it is confusing. Let me add on to the confusion about an advantage of buying into an established suburb. The older suburb tends to give access to much bigger land plots. Think old HDB flats in AMK vs new BTOs in Punggol. It is the same thing. Unlike the Singapore situation, the difference in land size we are talking about here for both cases is huge. Take for example, a friend of mine just bought a house about 17km from Perth City sitting on almost 800sqm of land for $370k. Is that achievable if I am building a new house? Even if I can (in fact I can but I am a rare case) get someone to build a 4x2 for me at $170k, it will be impossible for me to get a piece of 700+ sqm land at $200k! Not if it is merely 17km away from the city anyway. The only drawback is, my friend's house is rather old and is in need of renovation. Some of us can live with this, some cannot. The point I want to make is, even after renovation costs, my friend still got a decent house on a big land in a relatively good suburb for a good price. Is building from scratch always cheaper than buying an established home then? Definitely not always the case.

In a nutshell, you've got to be really clear what are your priorities and what is the best option to get what you want at the best price. You may want to ask people who have done both, not the sales consultants who obviously have a conflict of interests to you. To round this off, let me share with you some indisputable facts of building a new house (vs buying an older house)

- You have access to a large selection of land. Thus if you are anal about land shape or size, which direction to face, what you see outside, whether there is a lamp-post just outside your place or not and stuff like that, it is much easier to find one suitable plot than to wait for an established home that ticks all your boxes to be available on the market. However, if you have plans to subdivide your land, it is definitely more profitable to buy an existing house sitting on a suitable plot of land in an older suburb.

- It is a cheaper option to customise your home. Like building a toilet bowl in your alfresco area. Or a toilet bowl to sit on while you cook. A hole in the wall to store your secret stash. Whatever cool things you secretly want to do for a long time. Sure you can do the same thing with an established home as well. You can even turn it into it into a giant shoe shaped house if you want - but radical changes will not be cheaper than doing it from scratch. Structural changes will also require approval from the council. (stuff you don't really want to deal with)

- You have the option to choose a a brand new suburb. Think Punggol in Singapore. New flats, new brats, new roads, new shops, new trees, new traffic jam junctions. Some people like this kind of feeling. They think that buying into an old house will certainly mean having a pot bellied uncle sitting under his palm tree fanning himself constantly giving you a creepy grin, as a neighbour.

- You can choose to build basic. (thus you get a brand new home on cheap) But trust me, if you are the typical Singaporean, you wouldn't be able to make yourself exercise this option and will end up spending much more than you need to. Then you will sit under your palm tree fanning yourself constantly giving people that walk past your usual creepy grin while kicking yourself in the nuts for spending more and getting less to your friend who bought the older house in a fine suburb.