In my area, it's more expensive to build than it is to buy but....

marathonic

It should be! My question is, how much more expensive should it be? I know that, in the past, you could build a lot cheaper but, at the end of the day, a new-build will always require less maintenance throughout the expected life of the house and will also cost less from a heating perspective.

With this in mind, how much more expensive do you feel a new-build project can go before it becomes more sensible from a purely financial perspective to just buy a house that was build 2-3 decades ago?

As an example, in a pretty prestigious location near where I live, a 2000 square foot detached house is available for around £280,000. There is also a site with the existing house demolished on the market for £150,000.

From my research, I see that about £85 per square foot is a reasonable estimate for building and fitting out costs: including a 10% reserve for unexpected expenses. This would result in a new-build 2000 square foot house costing £170,000.

With this in mind, the new build would cost £40,000 more than the existing house, which is about 20 years old.

However, the new-build would have the latest heating system installed and conform to, and probably exceed, current building regulation standards with regards to efficiency. I would expect this to result in running costs that are somewhere in the region of £600 per year less than the older house.

I’d also expect maintenance costs to be a lot less – let’s assume a reasonably conservative figure of £600 per year cheaper.

As a 5-year fixed interest mortgage is available at below 3% at the moment, this £1,200 in savings would cover the interest on the additional mortgage of £40,000.

The house itself should always be more valuable than the older house – expecially as fuel costs continue to rise.

For this reason, I find myself asking, is it a simple, clean-cut fact that it makes more sense to buy than build or should a lot more consideration be given to the two options?