"Know about these house and land packages to make a more informed investment decision." - Matthew Lapish, Senior Investment Analyst
Buying a house and land package can make the dream of building your own home a whole lot easier and more affordable.
Things don't always go to plan, however, and delays and unexpected costs can arise.
The best way to prevent problems is to arm yourself with information: knowing what to check before you sign the contract, which builders to trust, and what financial support could be available can be game changing.
Housing estates have been growing in popularity since World War II, when rising real estate prices pushed first home buyers with growing families out of the inner city in search of their own 'quarter-acre block'.
Things have changed for the better since then, and house and land packages are no longer solely targeted at young families on modest budgets.
Housing estates have become less about cramming in as many homes as possible and more about creating a desirable place to live.
"Some of these estates were absolutely atrocious," says Steve Matsoukas, director at Loan Gallery Finance.
"The streets were narrow, the houses were small, and not a lot of thought was put into the liveability of an estate ... it was all about 'how many blocks can we cut this paddock up into?' Over the past few years, they've all gotten significantly better, and now they're actually taking out awards for design excellence."
Parklands, waterways, walking tracks and leafy streets abound, and estates are typically close to transport, schools and shopping centres.
A variety of designs and sizes have eliminated streets of cookiecutter houses, and they now suit a range of budgets.
While they still hold appeal for young families needing extra space, these estates also attract single people buying their first home, upsizing couples and retirees eager to escape the city and live out their golden years in peace.
Who benefits most from house and land packages?
Rob Douglas, CEO of McDonald Jones Homes, says the people who can benefit most from a house and land package are investors and those building or entering the housing market for the first time.
"Having the house and land package combination minimises the work people have to do, and everything is packaged upfront, making it as easy and as stress free as possible for those looking to build," says Douglas.
McDonald Jones Homes, the largest home builder in NSW, has adapted its designs since the pandemic to accommodate demand for flexible living spaces, home offices and study nooks, and solar/electric vehicle chargers in garages.
Douglas says buyers are also looking for a design that flows and a seamless transition between indoors and out.
"Mum and dad want a place they can retreat to, so we ensure the main bedroom delivers that aspect. Then it's all about the living areas, be that indoor or outdoor spaces. Open-plan living, an alfresco area for entertaining and a home theatre are now common design features in today's floorplans."
House and land buyers are also looking for plenty of natural light within the home and a central kitchen with an island bench and butler's pantry.
"Homes today need to be good to look at and easy to live in," says Douglas.
"They need to combine practicality, functionality and style."
Tips to avoid disaster
- Check what's included in the package price - landscaping, driveways and fencing are not usually covered.
- Find out what grants and subsidies you may be eligible for and when they expire.
- Use a well-established company with transparent costs and itemised inclusions.
- Build in a buffer to allow for delays and unexpected costs.
- Check that the builder is registered and has domestic building insurance.
- Don't hand over the final payment until all defects have been remedied.
Steve Matsoukas says first home buyers are often surprised at the small deposit they need to buy a house and land package.
The Australia-wide Home Guarantee Scheme has made it possible for first-timers to break into the market with as little as a 5% deposit. Through the scheme, the Federal government provides a guarantee for up to 15% of the purchase price, helping those with a limited deposit to avoid lenders mortgage insurance.
"The saving for a typical client is between 3% and 4% of their loan amount, or between $18,000 and $24,000," says Matsoukas.
"When the guarantee scheme was first announced, it was targeted at Australian citizens who were first home buyers specifically.
"From July 2023, it has been expanded to include permanent residents as well as those who have not owned property in the past 10 years.
"The thinking behind allowing those that hadn't owned property in the past decade was trying to help those who have gone through something like a divorce or a business failure rebuild their lives and to provide a safe and secure place to raise a family."
The average price of a house and land package in a greenfield estate (a newly released block of land in a residential, industrial, commercial or agricultural zone) is around $750,000, says Matsoukas, with a typical first home buyer needing a deposit of between $41,000 and $54,000.
"It's eminently achievable for most people buying their first home, and a far cry from the ludicrous amounts generally touted in the general media as a minimum deposit amount."
First homeowner grants and stamp duty concessions, which vary by State and Territory, can provide significant extra assistance.
Full article: Money Magazine