Does a Brand New House and Land Package Make a Good Investment?

Jayde Ferguson

House and land packages are heavily promoted but do they make a good investment option?

It can be hard to ignore house and land packages – they’re heavily promoted by developers whether it be on TV commercials, on billboards dotted along major highways or on real-estate websites.

Do House and Land Packages Make a Good Investment?

While they are fine for lifestyle choices, as property investment strategy they’re typically not the best option. Here’s why.

House and land packages are generally located on the urban fringe of our capital cities. This means they lack the quality amenities that people need and want to live near, such as access to transport links (i.e. train stations), schools, universities and café and retail precincts. Furthermore, they are often located great distances from major employment hubs, such as capital city CBDs.

As the populations in Australia’s capital cities grow, and roads become more congested, people will increasingly value accessibility to these amenities. Thereby, established suburbs typically make better investment options because these areas already have a lot of the amenity and infrastructure in place, and are also generally located closer to CBD areas.

Another major factor that typically weighs heavily on the performance of house and land packages is the amount of supply in the surrounding areas. Because house and land packages are located on the urban fringe, there is generally an ample amount of vacant land nearby. This land can be developed to build more residential housing as required, allowing supply and demand to remain fairly balanced.

As we know, property prices will remain constrained if supply remains in line with demand, which is why these types of properties aren’t preferred as investments. Some people might argue that buying a brand new house and land package is effective in reducing your taxable income because you can use the depreciation of the property to offset your salary.

However, buying an investment property for tax purposes isn’t a smart idea because you’re essentially acquiring a second-rate asset for the sake of making some minor savings each year. So while house and land packages are fine for lifestyle choices, such as for owner-occupiers on a limited budget who want to live in a brand new home, these types of properties aren’t typically best for investment.

Investors should instead focus on established houses in suburbs within a capital city’s inner or middle ring that are close to good amenities and infrastructure, as these generally provide the best capital growth.

Author Bio

Damian Collins is the founder and managing director of property investment consultancy Momentum Wealth. Offering market leading research and advice on the Australian property market, the company helps clients accelerate their wealth through property investment by assisting them in the strategic planning, financing, acquisition, management and development of their commercial and residential investment properties. Damian has completed a Bachelor of Business at RMIT University and a Graduate Diploma in Property at Curtin University. Damian is a board member of the Property Investment Professionals of Australia (PIPA) and is the Deputy President of the Real Estate Institute of Western Australia (REIWA).