buying new house and land package as PPOR(Sydney West)?

Hi gang,

I'm preparing to buy a first home PPOR and looking to learn a bit about something I'm seeing in the market, these are new house and land packages but would they also be considered buying off the plan? I assume none of these houses are actually built yet, how does this transaction work? do I place a deposit and choose my options and then pay the rest upon completion?

Main reason for this post is, I'm trying to figure out why every single one of these look so appealing, and in most cases a brand new house is cheaper than an old one. I understand that all the photos are a digital interpretation of what it's supposed to turn out like, but what factors come into play to make these considerably cheaper than all existing properties and is this a good option for a first home buyer or a mistake.

Currently my understanding is that these packages are small blocks and don't have much of a backyard, none have any land size or pictures of backyards. Also many of the prices already have first home owner grant factored in. Besides that, I'm struggling to understand why this isn't a good deal considering how flashy the photos look.

A few links for reference, just the usual though. If i do a map search with my price limit at 650k, when I look for example in Edmondson Park and Bardia, the only results are these house and land packages, nothing else for under 650k.

Lot 14 Arthur Allen Drive, Bardia NSW 2565 - Off The Plan House For Sale | Domain

Lot 1255 Bardia Ave, Bardia NSW 2565 - Off The Plan House For Sale | Domain

Lot 14 Macdonald Road, Edmondson Park NSW 2174 - Off The Plan House For Sale | Domain

Edmondson Park NSW 2174 - 3 beds house for Sale, $636,999 - 2014572724 | Domain

 

As a learning journey for yourself go have a chat with the developer and you may also need to call around to cover things the developer wont do and price one up with everything done including fully landscaped. To compare apples with apples against an established home in the area, you’ll always need to option up to get a ready to live in home, don’t forget things like blinds etc. Also, I noticed a few things in the photos like squared cornices and facade extras. They look like 300 and 400 m blocks?, so you’ll have to also take into account that homes in the area around $650-700 could be on 450-550 m blocks.

General rule of thumb you want scarcity. These developments are probably driving down the prices of suburbs around them because as you say, if you can buy new with builders warranty for the same thing why buy old? But that will be you soon. When the undeveloped land next door gets developed now you will have the old house that no one wants.

 

Don't buy anything off the plan in Sydney at the moment if you need a loan to buy it. You are bound to the contract price you sign for, but the bank will value it once it is completed. If the bank valuation is lower than the contract price you will have to come up with the difference in cash.

There are enough completed properties around the place that the developers can't sell, so I'd be going for those ones, or established properties in those suburbs.

 

Very good idea, very unlikely that I would buy one of these off the plan, is there anywhere I should be looking for these vacant properties being sold besides realestate and domain, I gather that vacancies would be fairly high in these new developments but I just don't see them go up for sale on major websites

 

Hi @Fapo

OTP would be high risk at this point in time, especially when it comes to valuation.

As you called out, these may be attractive, but come with much smaller land component.

With these OTP purchases, you will find you are paying more for the building than the land.

What is stopping you from purchasing a property which has already been built or alternatively an established property with a bigger land component?

OTP which is not ready yet may pose valuation risk at settlement... even more important if you are in LMI territory and putting in a smaller deposit.

 

Wow....these seem to be spec homes..i.e. you make one payment on completion. Thus no progress payments. This is like buying an off the plan apartment...and incredibily dangerous in a falling market like Sydney. Works okay in rising market but stay the hell away in falling market!

If you must..buy...look for desperate sellers trying to off load land and then build the house. Make sure you buy the land well under...what I am hearing is that sellers are not adjusting prices yet...but they will .....

 

Fapo it is a buyers market.
I think it is a good time to buy but I agree with the sentiment of the feedback you are receiving that buying off the plan in this manner has no advantages currently.
I suggest you look for options that give you rather than the developer an advantage.
The best gain you should make in this market is price. A good buy now may look genius in a few years.
Obviously it comes down to budget and your particular preferences but now is a very good time to buy homes you previously thought were unattainable.

 

The land size on these sorts of purchases in SW Sydney is getting toward 300sqm lots! Stay away!

 

as mentioned previously, buying OTP in a falling market is not the best scenario
if the deal seems too good to be true........then it probably is.

I wonder if the same was said about Five Dock in 1908 ?
it was out in the sticks.
lots of Semi's around 300-350m2.