House and Land Packages

New house and land packages are the source of new property coming onto the property market. These packages are promoted by land developers as well as builders because they both compliment each other by making property investors aware of what is available.

When you begin exploring buying land you’ll find that not every block is the same. Although many new “greenfield” developments “bench” their blocks to make it easier for builders to build on there are many blocks that are sloping or harder to build on.

What is interesting in house and land packages is that several builders normally compete with each other by promoting their home designs on the same blocks of land. Another interesting fact is that even though these blocks are promoted by a builder you can often choose a different builder altogether once you buy the block.

Some larger property development companies own an entire estate and have exclusivity on building the homes for that estate and others like Allam will actually start building homes so that buyers can buy the land and newly built home in one transaction – one contract.

What do Land Developers do?

Benching just means they make each block level and include retaining walls between each lot so that the buyers and the builders don’t need to do this costly work – it’s cheaper to do it all at the development stage rather than later.

New estates are converted from farmland or existing areas of undeveloped land and they involve a large investment in civil works to:

• Clear the land ready for building
• map out the boundaries of each block
• provide roads and access
• provide services like power, water and sewer

New housing estates also set the benchmark for property values and are a good indicator of the land values in surrounding areas as well as the land in nearby areas. For example, Huntlee is a massive greenfield development in Newcastle’s west and has some of the cheapest land available. If you look at the value of land at Huntlee you’ll see that anything close to the coast or Newcastle is going to be worth more because there is stronger demand to be in those places.

Unregistered Land

If a block of land has an address it is registered. If it is only identified by a Lot number then it is unregistered. There are negatives and positives to buying unregistered land and they include:

• You cannot build on land until it is registered
• you may have to wait a long time for the land to register (depends on the developer)
• your “lot” size and details may change between when you buy it and when it registered
• you only have to pay a small deposit to own the lot
• you may benefit when values of land in that estate go up

Some people make money by buying unregistered land in a large estate early and then sell it when the estate grows and it registers while others just hold onto it without building. It is a known fact that land values tend to go up because they are a scarce resource while new home values go down as they depreciate after being built.

Although you can buy unregistered land cheaply by putting down a small deposit you’ll be required to pay the full balance not long after the land registers. This can be a tricky time for some property investors who realise they may not be able to afford it and need to sell.

Building on Registered land

It is only when the land registers that you can build on it but you can do a little planning before hand. You can explore what type of house you want, including size, number of storeys and the quality of the home. There is a big difference between going with a low cost, cheap builder or building a top quality home and you can tell easily by seeing them in real life. Most people see these homes on display at places like Homeworld. It’s at this stage you should consider what you want to achieve in this property investment.

Some property investors just want a cheap block and a cheap home build because they want to rent it out for a while and then sell it to get the capital gain. Others want to live in it for a while and then sell it.

The important thing to consider in this part of the process is “who is going to buy it when you sell”.

Getting a build price can range from speaking to a sales person to getting a detailed quote and there can be a big difference between the two. A sales person will focus on the marketing strategy of the building company at the time while a detailed quote will usually take into consideration every aspect of the land and how that affects the build price.