Are house and land packages a good buy?

House and land packages have plenty of appeal, but there are pitfalls to be aware of to decide if they offer true value for money.

Article updated 28 June 2021

There’s nothing like a sparkling new home, and right now a swag of financial incentives could be up for grabs when you buy or build a new place. Australians haven’t  any time taking advantage of them either – the number of loans for the construction of new homes jumped 94% year over year!1

If a brand new home is on your wishlist, a house and land package can be a hassle-free and affordable option. We explain the pros and cons to help you enjoy a good buy.

House and land packages can be very affordable 

House and land packages come in two varieties. A ‘turnkey’ package typically offers a newly built home on a particular lot – all the buyer has to do is turn the door key and their home is ready to go. Alternatively, a home and land package provides the flexibility to buy vacant land first, then build a home from a set range of builders and designs.

House and land packages come in two varieties. A ‘turnkey’ package typically offers a newly built home on a particular lot – all the buyer has to do is turn the door key and their home is ready to go. Alternatively, a home and land package provides the flexibility to buy vacant land first, then build a home from a set range of builders and designs.

Both options could be a very affordable way to enjoy the benefits of a new home. As a guide, in Sydney’s south-west there are over-sized lots of 500 square metres starting at just under $490,000, with house packages from around $300,000.2 If you combine the house and land of $790,000 that’s still $396,518 below Sydney’s median house value of $1,186,518.3

You may also be eligible for other savings too. Buying land first and building later provides savings on stamp duty, as duty is only levied on the value of the land.  In addition, financial support such as the First Home Owner Grant, is often only available for newly built homes.

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House and Land Packages as a First Home Buyer

If you’re a first home buyer and are looking to purchase land to build your home on, you may be able to purchase a modest home with a deposit as little as a 5% under the Government’s First Home Loan Deposit Scheme (New Homes) Guarantee. If you purchase a house and land package or land and a separate contract to build a home, you may be eligible to apply for one of the 10,000 places in this scheme. However, it is important to understand that you must start building within 6 months of entering the contract, finish building within 24 months and move into the property within 6 months of the occupancy certificate being issued. 


New Home Guarantee Explained

Saving up a 20% deposit to buy your first home can be really hard. You may be wondering what government support is available to you.

In this Mortgage Minute Emma explains the New Home Guarantee scheme, which allows you to buy a home with as little as a 5% deposit. Watch now to find out more.

Read more on the 5% deposit scheme here or speak to your local Mortgage Choice broker to understand if you’ll meet all eligibility requirements today!

It’s also important to note that paying for a home involves more than the deposit. During the purchase process, extra costs may arise and home buyers will need to factor these into their budget. Extra costs may include pest and building, legal fees and more. 

Additionally, if you intend to purchase land to build your first home on, you may be eligible to apply for the First home owner grant and even receive government concessions on your stamp duty. 

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What is a house and land package?

A house and land package can be a good option when you are looking to buy your home.

Watch our video to understand the benefits and risks of choosing a house and land package to buy your home and understand if it's the right choice for you.

It can make a house and land package an exciting choice. But along with the upsides, there are drawbacks to watch out for.

1. The hidden costs

It can be great fun to check out display homes, but remember, these are showroom pieces, which may include features like landscaping that come at an extra cost. Ask the builder for a detailed breakdown of what’s included in the price you’re being quoted so you know exactly what your money is buying.  

2. The potential for blow outs

House and land packages can offer opportunities to alter a home’s design. This is an opportunity to customise the building to suit your block and lifestyle, but even small deviations from the ‘standard’ design will push the price up.  Be sure your budget can handle any extra costs.

3. Lot sizes can be small

Lot sizes in new developments have become smaller over time, and currently average less than 395 square metres in Sydney, Melbourne and Perth4. This helps to keep house and land packages affordable, though it does make it important to think about how your new home should be oriented to make the most of your land – and your privacy. 

4. Will the location add to transport costs?

House and land packages are typically available in outer suburban locations. This can mean a long weekday commute if you work in a city centre.  Australians already spend around 13.8% of household income on transport costs5, and if your new subdivision has limited public transport options, the cost of travelling to and from work can quickly add up.

Pre-approval lets you know what’s affordable

If a house and land package sounds right for you, it’s important to speak with a home loan expert at an early stage.

At Mortgage Choice, we can explain your borrowing power - which gives you the starting point you need to know how much you can afford to spend on your new home. 

It also makes sense to talk about getting a home loan pre-approval. That way you have a clear idea of whether there’s room in your budget to customise the design and stamp your personality on your new home.

Best of all, your local Mortgage Choice broker can also help you find a competitive home loan that’s right for your needs, no matter whether you choose a turnkey package or a home and land deal.

Signing up for a house and land package is a big step. To know more about what’s involved – and to understand any incentives you may be eligible for, call your local broker today.


Posted in: Home loans

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1 April ABS Statistics https://www.abs.gov.au/statistics/economy/finance/lending-indicators/latest-release
2 https://www.domain.com.au/news/sydneys-desperate-buyers-push-up-demand-for-land-1062480/
3https://www.realestate.com.au/property-house-nsw-riverstone-133224946

4 https://udia.com.au/research/udia-state-of-the-land-2020/
5 https://www.aaa.asn.au/2020/02/28/rising-household-transport-costs-outstrip-inflation/