Published at: 6/21/2016 3:29:00 PM
Buying in a new suburb can provide value and a chance to be part of a growing community but be aware of the pitfalls.
House and land packages are often pitched at first home buyers with prices that offer value and affordability. As a buyer you have the freedom to choose the block of land and home design that suits your budget, your needs and your personal tastes, without concerns about renovating that may apply with an established home.
House and land packages offer other pluses too. Newly built homes tend to be energy efficient, and if you choose a reputable builder, it could be years before any repair work is needed. In fact, the home will be covered by a builder’s warranty so you’re protected if anything goes wrong.
It’s also a chance to be part of an emerging community. Many of the house and land packages available are located in new, master-planned estates with a range of equally brand new facilities like parks, retail centres and schools.
Opting for a house and land package can bring valuable financial pluses. Savings on stamp duty can apply where the home is yet to be constructed. You only pay stamp duty on the land component of the deal - not the house and land combined.
Even sweeter, many state governments now restrict stamp duty concessions and first home buyer perks to those who build or buy a newly constructed home. Our Stamp Duty Calculator will display the incentives currently available in your patch.
The downsides…small lot sizes, outer suburban locations
Along with the pluses, there can be downsides. A house and land deal may appear to offer good value in terms of inclusions but many new estates feature small lot sizes. This is a way of keeping prices down but be sure a small land area will still meet your needs in years to come, if, for instance, you start a family.
Consider the location too. New estates are often constructed in outer ring suburbs, where employment opportunities and public transport may be thin on the ground. This can mean a long and potentially expensive commute to work each day – money that could go towards paying off a home in a more established area.
Price appreciation can be slower
Home values in outer suburban areas can rise at a slower pace than for established locations closer to city centres. It’s an issue that can particularly apply in larger developments with a significant number of new homes, and slower capital growth could impact your ability to climb the property ladder further down the track.
The key is to weigh up the pros and cons with reference to your needs. If a house and land deal is right for you, be sure you choose a reputable builder and understand exactly what is included in the contract price. The more you know about the package you’re buying into, the less opportunity there is for costly surprises once construction gets underway.