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Is house and land worth a look?

7 reasons why some experts believe houses beat apartments:

  1. Greater capital growth potential
  2. Better value for money
  3. Save on owners corporation fees
  4. Families are less transient tenants
  5. Shorter build time, start investing sooner
  6. Less competition for tenants at completion
  7. Agents earn their money faster

 

northcote
Townhouses in Northcote

They may not have the sparkling façade of an inner-city skyscraper but is the suburban house and land package really the poor cousin? Many in the industry think not and they have some valid points that will make even the most stanch CBD only investment group consider popping one or two great Australian dreams into their client’s portfolios.

With prices for inner city apartments in Australia’s capital cities starting to stretch past the reach of many investors, affordability maybe a good reason to look to the suburbs. “In the past 2 years we have definitely seen an increase in house and land sales from the investor market and I’d put that down to a few factors, the first being affordability,” said Reventon Group National Manager Tim Graham.

Due to a continuous land supply, areas on the outskirts of capital cities and regional towns are becoming increasingly popular locations for house & land and townhouse projects. “A lot of regional centres of Victoria are offering great value for money with higher rental yields,” said Mr Graham.

Peter Coyle from Glenvill believes it is not just the rental yield but the quality of the tenant that makes house and land attractive. “As an investor, when you put a family in there, they’re not leaving anytime soon,” said Mr Coyle.

Whilst apartment investors will typically chase as long a settlement time as possible to maximise capital gain potential, for house and land investments where the time period from contract signing to settlement is usually much tighter, investors are looking for quick cash-flow and year one tax benefits. “In many estates, where land supply is ready, we can have a home built and ready to move into in 4 months” said Mr Almosawi from M Property Group.

This fact is also very significant for the advisor who relies on commission for their livelihood. Whilst apartment commissions are split 50% at unconditional contract and 50% at settlement, which may be several years away; house and land typically pays commission 50% at unconditional contract and the balance at either slab or frame stage. This shortens the agent/advisors payment period from years to months.

And speaking of time… “For those people who are looking to get into house & land in Melbourne, now is a good time,” said Mr Coyle. “house & land in Melbourne at the moment is flying.”

So whilst the shimmer of the city lights will always draw big business, it is clear that there is still a lot of money to be made in the suburbs and this fact has not been missed. Now with a dedicated house & land section on Investorist offering hundreds of houses and townhouses from 40 of Australia’s leading builders and marketers, it has also never been easier to evaluate the right house and land package for your clients.