If most of us had the ability, it’s likely we would prefer to select our own plot of land and build our dream home on it. And why not – when it comes to buying land, there are some clear unique benefits, most of which are financial.
Land appreciates, buildings don’t!
This is reflected in the fact that houses (and the land on which they stand) appreciate more than units.
To prove the point, let’s look at several random suburbs and compare the median 2010 price to the median 2017 price for houses and units. The last column in green shows the additional growth of houses compared to units.
The closer to the city, the greater the price
When it comes to house and land, the same product is worth more as you move closer to the city.
You can see this for yourself — find relative similar house and land sizes and you will find the prices increase as you move closer to the city. Follow Melbourne’s major freeways to compare the same part of Melbourne and you will find this holds strong. Moving along the M1 and comparing the medians of 3 bedroom homes in the following suburbs shows the picture clearly:
This is a key lifestyle decision you need to make. Based on the above it would suggest the bigger the block and house, closer to the city, the more it will be worth. This is where affordability and lifestyle come into it. If you have a budget around $600,000 this would get you a small apartment close to the city, while in greenfield corridors, you can purchase a home on its own block of land. In essence, you get a lot more house and land for your money.
Most projects these days offer a range of lot sizes, and savvy builders are delivering numerous options for these various sizes, giving buyers access to lots that are perfect for their budget.
You can build your dream home on your dream block
Once you commit to this type of property, you can choose the block of land that is perfect for you. And, from a builder’s standard range, there are hundreds of house designs that give you plenty of options for your dream home.
Several of these homes have pre-approved options you can go with or, depending on your budget, you can opt to design your own home. But be careful – going down this path can quickly get expensive.
When it comes to the choices available to you, the big question is, how much of your budget will you commit to the home versus the land lot? This is a key question as it has a significant impact on both how big your land size will be, and how big your home will be, plus what level of inclusions you can afford.
After you make this decision, you can select a home builder and work on designing a home that is built just for you. This gives you an advantage over buying an established home – you’ll be able to steer clear of unwanted design elements.
Stamp duty savings
By choosing to build new compared to buying an established home, you’ll also benefit from lowered stamp duty fees. Take a look at the table below:
Source: State Revenue Office Stamp Duty Calculator.
In the above, the difference of $19,700 is due to the fact that when you purchase land you only pay stamp duty on the land, not the house. When it comes to established real estate you pay stamp duty on the total price – the land AND the house.
Less upkeep and maintenance
When you build your own home, you get a brand new residence free from any wear and tear. When you buy an established home, there may be problems that come with the age of the property – and this can lead to a lot of hidden costs that many buyers do not find out about until it is too late.
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