Should First Home Buyers Build or Buy in Tasmania in 2026?

One of the most common questions we get asked as brokers, is “are we better off buying an established place, or building ourselves”. The data behind the answer to this has changed a lot in the past 5 years, so here is what you need to know.

Here’s some of the grants and incentives available to first home buyers

First Home Owners Grant
This applies to brand new homes, or if you buy land and build. The current grant is $20,000 in Tasmania from 1 July 2026, down from $30,000. It currently applies until 30 June 2027.
Unlike most other states, there is no price cap on this grant, and income also does not affect eligibility.

That $20k you receive must be used towards the construction of your property.

5% Deposit Scheme

This scheme applies to both established and new properties.

This allows you to buy your first home with only a 5% deposit, and you avoid the costs of Lenders Mortgage Insurance (LMI), which is an insurance premium the bank passes on to the borrower, this can cost around $17,000 (depending on the lender)  if you borrowed 95% on a $600,000 property.
Price caps are $700k for Greater Hobart, $550k for the rest of Tasmania. Talk to a broker to find out the price caps for where you want to buy.

Property transfer duty used to be entirely waived on established properties up to $750,000, this is no longer the case.

The case for building new

• You will receive the $20,000 first home owners grant.
• Your property transfer duty (stamp duty) will be lower if land and build are separate (does not apply to brand new completed properties). If eligible, you only pay duty on the land component.
• You can design the property for your own liking.
• Potential for lower maintenance costs, and better energy efficiency.

The case for buying established

• You move in sooner, no need to wait for the build to be completed, and you won’t have to pay rent and a mortgage whilst construction is happening.
• Far easier in some cases to buy into more established suburbs.
• No build delays, cost blowouts or builder risks.
• Room to negotiate on price, and to add values with renovating a property to increase your equity position. Article here on How do I calculate the equity in my home?

How does a construction loan work?

Most construction loans run on something called “progress payments”. These are payments made to the builder at different stages of the construction. You may choose to fund these stages yourself, or borrow from the bank to fund them.

If you borrow from the bank, the bank will fund the builder at the relevant stages, and only once that stage is funded, you start making the repayments on that portion of the loan.

This avoids you paying for the full build upfront.

Many lenders will also make the build portion of your loan interest only for 12-24 months. This minimises the repayments and especially helps those who are renting whilst building.

Which is right for you?

There’s a few questions you should be asking yourself with either option

• How soon do you need to move? If your lease is running up soon for example, would you have time to wait for your property to be built?
• Can you justify paying rent at the same time as you build. It’s worthwhile playing around with our Repayment Calculator which can help you decide on this. Or talk to a broker who can discuss it in more detail.
• Do you want a specific location? If you’re planning to build in a more established area, vacant land could be a lot harder to find, compared to going 20 minutes further away. Could you justify living further away from where you’d want to be?
• How much risk can you handle? Cost blowouts, variations, delays, completion valuation, just to name a few. Completion valuation refers to the value of the property once the build is complete. If it values low, you may need to cover the gap.

Read more here on valuations: What Happens at a Bank Valuation For a Mortgage.

Hear both sides on the night.

We are hosting a first home buyers night, at the Shoreline Hotel on the 28th of October, 6pm start.

Ronald Young & Co Builders and Slate Estate Agents are presenting.

It’s free to attend, with giveaways and vouchers to help assist in getting into your first home.

Link here to attend