The Pros and Cons of Knock Down Rebuilds

The Australian Federal Government has just announced significant changes to the first-home buyers system, enabling more people to access more funds to enter the housing market. Many predict that this will increase competition for homes nationwide and may lead to a further rise in house prices.

As property prices rise and the cost of renovating continues to climb, many Australians are considering a knock down rebuild as an alternative. Instead of buying a new house or sinking money into a patchy renovation, the idea is simple: knock down your existing home and build a brand new one in its place.

What is a Knock Down Rebuild?

Like the name suggests, a knock down rebuild (KDR) involves purchasing a home, knocking it down and constructing a new one on the land. Depending on the quality of the home you buy, this may be a better option than renovating. Some older homes, particularly those built with materials like fibro or asbestos (popular in homes built between the 1950s and the 1990s), can be harder to renovate to modern standards, and starting with a clean slate can give the homeowners full control.

If the home has a strange layout, multiple structural issues, or is generally unsafe, knocking it down and building a brand new structure may be the best option. This also means the new home will include modern safety features and will be built to safety and structural standards, making it a better option for you and your family long term.

Pros of a Knock Down Rebuild

Custom Design

Whether you purchase a project home and customise the layout and finishes, or you work with an architect to create your dream home from scratch, building your home allows you to produce the perfect dream home for you. Gone are the days of making the house you live in work for you. By building your own home, you’ll ensure that your house works for you.

Cost Efficiency

Depending on the route you go and how complicated the design is, rebuilding a home can end up costing less than taking on extensive renovations. Particularly in the case of older homes, you may not know the extent the lower building standards may have impacted the original construction of the house, which now would need to be amended, increasing your costs exponentially. Getting plenty of in-depth quotes from tradies and professionals will help you make a more informed decision.

Live Where You Want Without Compromise

Perhaps you bought your home a while ago, but it’s now outdated and no longer serving you in the best way. If you’ve been living somewhere for a while, chances are you’re pretty involved in the community. You have your favourite coffee shops, you’re friendly with your neighbours, and your kids are enrolled in the local school. Doing a knock down rebuild allows you to stay in the area you love, but create a brand new home that perfectly serves your needs. Just remember to factor in any additional costs for accommodation while your home is being built.

Cons of a Knock Down Rebuild

Upfront Costs

The initial outlay of money can be enormous, especially if you’re going with a bespoke-built house. While with renovations, you can steadily chip away at things, a KDR is all or nothing. You need to take into account the costs of demolition, design, construction and your accommodation costs while not living in your home.

Time and Complexity

Again, while you can chip away at renovations, working on different spaces steadily until the whole home is finished, rebuilding a house can take several months, many of those months without you living in your home. There are also likely to be far more permits, fees and council approvals to get compared to renovations.

Different Financing

Financing a knock down rebuild is different from taking out a regular mortgage. You may need a construction loan, which releases funds in stages as the build progresses. These loans often come with stricter requirements and may affect your borrowing capacity. If you’re based in Victoria, working with a local broker who understands home loans in Moonee Ponds or your local area can help you navigate your options and avoid common pitfalls. They can also assist with bridging finance if you need a place to stay during the rebuild.

Deciding whether to renovate or take on a knock down rebuild is one of the most major decisions a person can make. Whatever route you take, it’s an expensive venture and can cause major financial stress. Spend time considering your options, getting quotes from experts and make sure whatever you do is right for you.