Are New Builds a Good Investment?

With real estate growth slowing in capital cities like Sydney and Melbourne, an increasing number of property investors are looking to build instead of buy for investment, especially in rapidly developing regional markets like Townsville.

But are new builds a worthwhile investment? To help provide more clarity for investors, we’ve gathered specific insights from a developer’s perspective on the investment potential of new home builds. 

How Do New Home Builds Work for Investment? 

Purchasing or building a new home for the purpose of an investment starts with researching potential locations that are likely to see consistent rental returns. Working with a local investment builder or developer can simplify this process—the local team will leverage a deeper understanding of the region’s market trends to pick out a suitable location for the build.

Once the property is built, investors can expect investment returns in two forms: rental returns and capital appreciation. Rental returns are straightforward — tenants occupy the property and pay rent. Capital appreciation refers to the increase in the property's value over time — these potential earnings are not fully realised until the property is sold. 

Why New Home Builds Are a Good Investment 

New investment builds offer a higher potential for maximising returns while minimising costs. Here are the key standout features of new builds for investment:

Low maintenance costs

A brand new property is highly unlikely to suffer from the costs of frequent maintenance and repair work, which offers investors greater assurance regarding the margin of return. Building a new property for investment in Queensland comes with a bonus — a 7-year builders warranty that covers any major issues with the property.

Control over rental appeal

With a new build, investors don’t have to scour the market for a property that attracts tenants. Instead, inventors have control over the building design to create an ideal property for tenants. Homes can be built with a contemporary layout or energy-saving features like solar panels to offer more value to tenants. A new build will also have a 7-star energy efficiency rating, in accordance with the 2022 National Construction Code (NCC). 

Higher rental prices

It should come as no surprise that newly built properties are highly sought after by tenants. As a result, new builds tend to fetch higher rents compared to existing properties in the same area. In turn, higher rental prices provide more immediate returns for investors and a greater overall yield on the investment. 

Tax benefits

New builds offer investors advantages during tax time due to higher depreciation allowances. Investors can claim depreciation on the new investment build for up to 40 years, potentially adding up to thousands of dollars in tax benefits.

Making the Most of a New Home Build for Investment

So far, we’ve mentioned that new builds make good investments. However, it would be remiss of us not to state that, like with any investment, there are risks that affect how good a new build will be. The success of an investment home build will hinge on various factors such as location, availability of nearby amenities, and future plans for the surrounding area. As such, it’s important to consider ways to make the most of a new investment build.

Build in locations with high potential for growth 

Location is the number one rule in property investment — suburbs located right next to each other can have drastically different real estate growth rates. Work with a local builder or developer who knows the region’s hotspots and upcoming development areas. New builds thrive in areas that offer accessibility and amenities, so plan to build in areas slated for future development. 

Choose masterplanned communities

Masterplanned communities are new neighbourhoods designed to provide for the needs of residents, offering close proximity to amenities like schools and recreational areas. Consider building with developers working on masterplanned communities to achieve a new investment build with a full range of surrounding amenities. 

Maidment offers a wide range of land for sale in Townsville across four masterplanned communities in Bohle Plains, Mount Low, Jensen, and Alligator Creek. Build your next investment property with Townsville’s leading developer — we’ll deliver a high-quality home that provides consistent returns on investment for years to come.