New Homes Require Smaller Mortgages in Five Australian States

New Homes Require Smaller Mortgages in Five Australian States

If you’ve always thought that building a new home is the more expensive option, think again! New research reveals that in five Australian states, homebuyers are actually taking out smaller mortgages for new builds compared to existing properties.

Where Are New Homes More Affordable?

A recent analysis by Money.com.au shows that in the ACT, Tasmania, South Australia, Western Australia, and New South Wales, new homes are proving to be the more budget-friendly option. Buyers in these states are securing smaller home loans for new builds than they would for established properties.

The most striking difference is in the ACT, where the average mortgage for a new home is a massive 20% lower than for an established home ($525,991 vs. $658,491).

Tasmania follows closely behind, with new home loans averaging 12.5% less than those for existing properties ($408,889 vs. $467,208).

Meanwhile, the cost gap is still evident—though slightly smaller—in South Australia (6.6%), Western Australia (3.8%), and New South Wales (0.3%), all favouring new builds.

Why Are New Homes Cheaper in These States?

Money.com.au’s property expert, Mansour Soltani, attributes this trend to factors like land availability and regional affordability.

“Building a home can be a cheaper option in states where land is more affordable, particularly in growing regional markets,” he explains. “In contrast, established properties in high-demand metro areas come with premium price tags, pushing up loan sizes.”

Additionally, government incentives are making new builds even more appealing.

“Stamp duty concessions, first-home buyer grants, and low-deposit schemes can make new homes a more cost-effective choice, especially in certain regions,” says Soltani.

Where Are New Homes More Expensive?

Interestingly, the research also found that in three states, new builds come with a higher mortgage.

• In the Northern Territory, buyers are taking on loans 6.4% higher for new homes compared to existing properties.
• Queensland follows, with new home mortgages averaging 3.6% more ($660,910 vs. $637,835).
• Victoria shows a smaller premium of 1.8%, with new home loans sitting at $641,882 vs. $630,498 for established homes.

What Does This Mean for Homebuyers?

For those looking to get onto the property ladder or upgrade their home, this data suggests that building new could actually mean taking on less debt—at least in certain states.

With government incentives, affordable land in regional areas, and a lower mortgage requirement, new builds may be a smarter financial move than buying an existing home.

If you're considering making a move, it’s worth looking into the incentives available in your state and comparing the cost of buying versus building. You might be surprised at how much you could save!