For property buyers on a budget, it’s a common dilemma… to go for a house and land package or an apartment?
– ERIN DELAHUNTY
Melbourne-based buyer’s advocate Cate Bakos says many buyers across the country, especially those looking for their first home, weigh up purchasing a house and land package against an apartment, either off-theplan or established.
She says the secret to making the right choice is weighing up the pros and cons of each.
House & land package – The pros
Bakos says while she doesn’t generally recommend house and land packages, especially as “pure investments”, they do have upsides.
In addition to different financial incentives on offer in different state and territories, “all-inclusive” packages, commonly found in newly-established estates, are affordable.
“The biggest pro is affordability,” she says.
“If you want a big house on a decentsized block, a ‘four bedrooms, two bathrooms, plus a media room’-type of house; that’s affordable in a house and land package on the fringe of a city,” Bakos says.
New-build packages also “offer something brand-new and glossy”, which appeals to many, she says.
“There are certainly buyers who love to know a house is new, just theirs and no one else has touched it. People also like to have input into the design and colour scheme of their home and you get that with a house and land package.”
Then there’s demographics. “In new estates, you tend to get a lot of likeminded demographics and for some, knowing there will be, for example, lots of young families around you, with similarly-aged children, can be enticing from a social point of view.”
House & land package – The cons
With affordability, comes compromise on location, amenity and ultimately, lifestyle, Bakos says.
With almost all house and land packages located in new estates “quite a distance” from a city centre, long travel times, road congestion, poor public transport and lack of amenity
are obvious cons, she says.
“Being further out has an impact on your lifestyle. The main one, the commute, isn’t just about travel time, it’s about time away from the family. Then there’s the lack of amenities, because many estates are built before everything else you might want is in place.”
On the financial side, a house in an estate can be tricky to rent out, if required.
“The vacancy rates will be higher and it’s a big ask to get someone excited about renting a property that’s maybe an hour away from where they work,” Bakos says.
“You also need to understand that a new house that’s part of a house and land package can potentially depreciate at a more rapid rate than the land appreciates, meaning you can go backwards financially.”
Crime rates “further out” can also be an issue, Bakos adds.
An apartment – The pros
While a perceived oversupply of new apartments in places like Melbourne’s CBD has made headlines recently, affecting sentiment, Bakos says buying a new or established apartment has many upsides.
Stamp duty discounts for new apartments is just one.
“Most apartments are also conveniently located, so lifestyle is the big pro,” she says. “Walkability” is an important part of that, she adds.
“Apartments offer low maintenance and ready access to amenities you just don’t get on the outskirts of town,” Bakos says.
Well-proportioned apartments in established suburbs often hold their value in the long-term, offering better financial prospects, she adds.
An apartment – The cons
Financial risk, unexpectedly high outgoings and the challenges working with a strata body are some of the biggest downsides of apartments, Bakos says.
“There is a greater risk when it comes to the financing of brand new apartments, as your bank needs to agree with the price you paid and there are oversupply issues to consider,” she says.
With higher-density developments, featuring things like pools, gyms and concierge services, outgoings can be high, Bakos adds.
“These outgoings often don’t become obvious until you’ve settled. Sometimes what’s pitched to you and what you actually get, and are up for, can be different and that can hurt buyers.”
Also, some buyers “don’t like the idea” of having to work with a body corporate or strata body.
“You have to agree on shared costs and if something goes wrong structurally, something big, you can be out-voted and face a big expense,” Bakos says.