Capital Growth in Estates

I'm wondering if anyone has tracked median prices of houses in specific estates rather than the entire suburb (which includes the estates).

Do expensive estates have more growth than cheaper estates?

People used to suggest that the volume builder homes are cheaply built and would likely not be built to survive for a long time. Has anyone seen evidence of this happening in older areas?

 

Cheaper estates in vicinity of costlier estates get you better growth.

If you dont have enough land around or land is released in phased manner, you are good with reasonable hikes.

Volume builders who build quality builds st the right person should not be an issue.

Regards

 

Do you have examples you can point to for increased growth in cheaper estates next to more expensive estates?

Also, which are rhe good quality volume builders?

 

The closest data I have is looking at the top 100 performing suburbs in year end round ups. Suburbs with estates tend to be under represented (meaning they aren't in the top performers).

The other bit of data is negative equity maps: High Resolution Negative Equity Maps

Three reasons I don't like land estates:

• The land developer dictates the price of land. In tough times they will increase incentives to sell more lots, putting downward pressure on your house's price.
• Buyers are attracted to new estates for new properties. In 3 - 5 years and you want to sell, there is a brand new property down the road vs your property which is dated.
• You're often paying a lot of one off costs when buying a new property (that aren't paid on an established property). This includes: GST, sales reps' commission, land developer's margin + builder's margin.

 

These suburbs probably have more depreciating assets than the average of other suburbs. Maybe that explains their slower growth performance?

I wonder if their growth is hidden form the usual data most of us look at.

 

The hidden data is the fact that there is a record of the land price sale, but then you add improvements of a house (which isn't tracked) and then the second sale is the data of the land+house.

 

I'd also include things like Mains Grid Power, Water, Gas, NBN as well as New Roads and Drainage. All adds up.

 

Good point. It'd be nice to see an article breakdown all these factors to reveal the true capital growth in these areas. Would ruffle some feathers I'm sure.

 

Not really, the negative equity maps show primarily all the house and land areas. I'd suggest it is pretty well accepted that these areas are hardest hit in market downturns.

 

Sorry Kent,

To your points, the area and demand governs the price. But I get your point, the developer would keep on increasing the price with every release. If they don't, they wont have anyghing to show.

A 5 year old property is depreciated, no doubt but land value stays intact. If the buyer chose to be in decent estate and the next land developer is releasing lots after 6 to 8 months. That gives value.

When you buy land or any other property, gst is part of the sale, isn't it?
There is no dales rep cost involved when you buy directly from the developer and tjey cannot sell than the existing land value anyways.

You pay stamp duty only on the land and not on the entire property to compare, you get less land than an older property but you get a new house you get equity if you buy well and build and least maintenance for next 10 to 15 years as opposed to an established property.

Over and above not over capitalizing anywhere. It is not a ricket scienxe but has been my accelerated growth formulae and a lot on this forum were doing it and are doing.

Another point to add is that a new house and land area does not always tracks the sales on land only and then build. That leads to drop in median or uneven statistics but by the time statistics are out, the growth is lretty much gone. It pays to be early anywhere and if you are early, it has to be land.

I believe it is just a strategy and numbers should be of prime importance in any purchase when it comes to investment.


Regards

 

Actually, even around these areas in both nsw and vic are house and land. I have gone 100 kms north to 100 south in terms of new packages and yes, the areas would be hit hardest would be those where people think with heart, feel proced out and spend loads on builds.

But how the stats are concluded would be another thing and only if the stats gave the right picture, I would have trusted.

There still is some truth though. SOME!!!!!

 

Do they have these maps for different points in time over the past few decades? It'd be nice to see which areas where there is improvement.

 

I wanted to reply to this because, I think you may have misunderstood some of my points.

1) developer would keep on increasing the price with every release - this is not true. The developer will MATCH the demand of the market to the price. In tough times they will offer up incentives and value, and when the market is hot, they will lift their prices.

2) If they don't, they wont have anyghing to show. - this is not true. A developer wouldn't get funding on a deal unless they are making money day 1. They will just make MORE money if the market is going up.

3) next land developer is releasing lots after 6 to 8 months. That gives value. - How does this provide value? It provides supply, and YES if the developer can get a higher price they will. So basically, they are providing MORE supply into a rising market creating a price ceiling.

4) When you buy land or any other property, gst is part of the sale, isn't it? - No second point down. GST and Real Estate Sales - Lawyers Conveyancing.

Anyway there is a few other things, but I don't have time to get into them.

 

1. No estate I have seen in past 5.5 years have kept prices same across two stages and I have seen a lot of them. Despite ups and downs.

2. They can make money but at the same time buyer needs to see value and developer need to sell.

3. It provides availability of next purchase or land coming to market after 6 to 8 months. This increases the peices and demand of current available lots. Seen and experienced this.

4. Hmmm, GST or not GST, buying land less than market value add value to your portfolio and gives you brand new properties.

Time is money.