Buying a Newly Constructed House in Melbourne

Stepping into a freshly finished home knowing that every tile, tap and timber stud is brand new is an exciting milestone. For Melbourne buyers especially, newly constructed homes can offer improved energy efficiency, contemporary layouts and fewer immediate repair costs than older properties. Better still, if you are purchasing your very first home and the price is $750,000 or less, you may qualify for Victoria's $10,000 First Home Owner Grant (FHOG).

This guide breaks down the entire journey, from understanding the grant to collecting your keys, so you can approach the build with clarity and confidence.

1. Why Choose a Newly Constructed Home?

Modern standards – New builds must comply with the latest National Construction Code for structural integrity, bush fire safety and minimum 6-star energy ratings, reducing your long run utility bills.
Warranty cover – Statutory implied warranties follow the property for ten years, providing a safety net should structural issues emerge.
Personalisation – Depending on the stage of construction, you can often select colours, appliances and finishes to suit your taste, avoiding the cost and disruption of future renovations.
Lower maintenance – New roofing, plumbing and electrics usually translate to fewer call-outs and unexpected expenses during those first critical years of ownership.

2. Understanding the Victorian First Home Owner Grant

The FHOG is a one off $10,000 payment available when you buy or build your first "new" home defined as a house, townhouse, apartment or unit that has never been sold or occupied.

Key criteria

Price cap – Contract price (or total build cost) must not exceed $750,000.
Occupancy requirement – At least one applicant must live in the home for a continuous period of 12 months, commencing within 12 months of settlement or completion.
Previous ownership – Neither applicant (nor their spouse/partner) can have owned residential property in Australia.
Residency – Applicants must be Australian citizens or permanent residents.

Timing tip

You can lodge the FHOG application through an approved lender at finance approval, or directly with the State Revenue Office (SRO) once your Certificate of Occupancy is issued. Processing is faster via your lender because funds can be drawn at the first eligible progress payment handy for construction loans.

3. Stamp Duty Exemptions and Concessions

Separate to the FHOG, first-home buyers may benefit from land-transfer (stamp) duty relief. If your dutiable value is:

≤ $600,000 – Full exemption.
$600,001–$750,000 – Sliding-scale concession, potentially saving tens of thousands.

Purchasing off the plan? Only the land component and completed work at contract date are dutiable, often pushing you below the $600,000 threshold and magnifying your saving.

4. Financing a New Build

Buying land and constructing a house usually involves a construction loan drawn in stages slab, frame, lock up, fixing and completion. Interest is charged only on the amount drawn, but:

Factor in rent or alternate accommodation during the build.
Keep a contingency of 5%-10% for variations or site costs.
If your deposit is under 20%, lenders mortgage insurance (LMI) may apply, though some lenders waive LMI for FHOG recipients.

Look out for developer incentives too. In late 2024 Stockland offered first home buyers discounts worth up to $60,000 on selected house-and-land packages deals that can close gaps left by rising interest rates.

5. Builder Guarantees, Warranties and Insurance

Under the Domestic Building Contracts Act 1995 (Vic), six statutory warranties attach to every residential build covering work and materials, suitability for occupation and compliance with laws for 7 years from completion.

Builders also must take out domestic building insurance (formerly "builder's warranty insurance") on jobs over $16,000. This protects you if the builder dies, disappears or becomes insolvent.

Tip: Request a copy of the insurance certificate before paying your deposit.

6. The Road Map to Handover

Research suburbs and estates – Compare land release stages, infrastructure plans, commute times and school zones.
Inspect display homes – Look at workmanship quality, inclusions lists and upgrade costs.
Engage a conveyancer early – Have Pearson Chambers review the Section 32 vendor statement and land contract before you sign.
Secure pre-approval – Knowing your borrowing limit prevents over specifying upgrades.
Sign building contract – Confirm final plans, allowances and completion timeline.
Monitor construction – Arrange independent building inspections at slab, frame and pre-handover.
Obtain Certificate of Occupancy – Issued by the building surveyor once the home is safe to live in.
Final settlement – You pay the balance, collect keys and enjoy that new home smell.

7. Common Pitfalls (and How to Avoid Them)

Underbudgeting for site costs – Ask your builder for fixed price excavation and piering where possible.
Ignoring contract fine print – Sunset clauses, liquidated damages and variation margins matter; lean on a conveyancer for clarity.
Rushing colour selections – Finalise choices early to avoid variation fees.
Skimping on inspections – An independent inspector can spot issues before handover when the builder is obliged to fix them.
Over capitalising – Marble benchtops in a mid market estate may not boost resale value; assess upgrades through a valuer's lens.

8. The Role of Your Conveyancer

While a builder constructs the walls, a conveyancer builds legal protection around your purchase. Pearson Chambers Conveyancing will:

Analyse the Section 32 for easements, covenants and planning overlays.
Track FHOG and stamp duty claims, ensuring deadlines are met.
Coordinate with your lender for progress payments and settlement scheduling.
Review contract variations so you avoid nasty cost surprises down the track.

Early advice often prevents expensive disputes later, especially when construction runs over time or specification changes arise.

9. Life After Settlement: Maintaining Your New Home

The first three months act as a "settling in" period doors might swell and plaster may crack slightly as the timber frame dries. Document issues in a maintenance list and send it to the builder within the agreed defect liability period (usually 90 days). For bigger structural concerns, statutory warranties prevail for 7 years, but act quickly; delays may complicate claims.

Conclusion

A newly built home lets you start fresh floorboards untrodden, paint unscuffed and security primed for the next generation of smart devices. By combining the $10,000 FHOG, potential stamp duty savings and robust builder warranties, first time buyers in Melbourne can bridge the affordability gap and secure a property tailored to their lifestyle.

However, success hinges on solid preparation and expert guidance. Before you sign anything, let the professionals at Pearson Chambers Conveyancing safeguard your interests.

Contact Pearson Chambers Today

For a complimentary Section 32 review and personalised advice on your First Home Owner Grant application:

Phone: 03 9969 2405
Email: contact@pearsonchambers.com.au