NSW Leppington land off the plan

Hi all

I m a new member and just want to get everyone's thoughts on Leppington. I m looking to buy land off the plan from a developer. Settlement is in approx dec 2019 with a 5% deposit now and another 5% deposit once it gets DA approval which will be end of next year. My lawyer has looked at the contract and there are no nasty clauses. The land is currently unregistered. It's a 383sqm block and the price we agreed to was $480,000.

I have done this deal before in Perth and made money because I bought in a rising market. My main concern is the prospect of growth in Leppington over the next 3 years and the price I m paying is a bit high even though I won't need to settle on it in late 2019 or early 2020.

Any thoughts would be much appreciated.

 

With the airport going ahead and retail/commercial developments in the area, I think there are good growth potential in the area in the long term (~10 years). Infrastructure/transport developments are inevitable as well.

I presume $480k is just the land price; how much is the overall cost including dwelling? Having a quick look, some OTP houses are going for $900k+ ( 41 Jamboree Avenue Leppington NSW 2179 - House for Sale #125408050 - realestate.com.au ) but by the time you settle I would think the price adjustments would have kicked in - its probably happening now. It would be worthwhile if you could hold and sustain this investment for 5 years+ to ride over the adjustment.

 

Hi Michael M

What I am planning of purchasing is just land, I will build on it when the property settles in late 2019 or early 2020. I was thinking if I agreed to buy the land now with a 5% deposit and another 5% once there is DA approval(late 2018) I can save quite a bit on holding cost from now until settlement.

The holding cost of buying land at $480,000 on interest only loan is around $1,700 per month. If the property settles in December 2019, the savings would be $51,000.

I am currently in no rush to have a newly built home in Sydney right now as I own investment properties elsewhere in QLD but would like to own a house(not apartment) one day in Sydney. I know the market is quite hot at the moment but just hedging my bets if prices go more insane.

 

If you're gonna use it as a PPOR in future it's a sweet deal so u can save heaps of money in the mean time while still having one foot in the Sydney market.. can you afford it at its current value and say 70% LVR if the market does tank a bit and you have to come up with say 30% deposit for land?

 

I am faced with similar dilemma with a work colleague. He's situation is a OTP T/H in Schofields for PPOR which completion is about 1 years from now... By completion next year he hope to have 10% deposit + expenses...valuation may or may not stack up ( as I warned him) Estimated LMI is about $15k ?... I felt like lending him extra 10% and he pay me half of the LMI

 

I have factored in a 10% correction and will have more than 30% deposit when the time comes to avoid LMI.

I just want to see if there is a similar deal elsewhere in Sydney with 30 months settlement timeline.

 

It is dangerous doing OTP with only 10% deposit but suppose you have to play the cards you are dealt.

But I think the market has moved up if he signed the contract 12 months ago. I hope didn't over pay in Schofield

 

@2020vision Hmm I don't know much about Leppington so I can't say how it stacks up against the Rouse Hill area. But I'm currently selling 6 H+L packages (split contract) near Rouse Hill between 746k-804k with internals between 171-207m2 and land size 364-387m2 (similar to you). There's actually not much with Riverstone H+L packages gone in a month around 660k and Kellyville selling quickly too around 900k-1.3m.

 

Hi Pentanol
Are the titles ready on these blocks? If they are not registered, then when would it be registered?

 

@2020vision Whoops I meant 744k not 746k. Two of them are 31/12/17 and four at 30/9/17 so not all that long. I can't find many other new properties selling for that price. I'm selling to mostly Indians now so seems like they are getting wealthier now so maybe second wave of Asian dollars are coming. We shall see what the next year brings as investor action dies down and observe what Owner Occupiers do. I really can't say but all I'm saying is there are cheaper properties than Leppington so it depends where you want to live really. Any reason why you chose Leppington as I haven't met anyone who wanted properties there.

 

I think $1253 sqm is a good price, but mainly because I'm a land holder in the area
Unless it close to something big and commercial I doubt growth will be more than moderate for the next 2 yrs.

 

@Pentanol Yes I think what you are selling is priced quite well for Rouse Hill. I chose Leppington due to the fact I can settle in December 2019 which gives me time to save up more money without having to service the loan for another 30 months.

My work currently pays for my rent but this will end in 2020, so I m in no hurry to move in to my own place.

I would choose Rouse Hill over Leppington if I could find something that I can settle in about 30 months, fall a similar price of course.

Please let me know if you have any H & L that offers a long settlement

 

@Piston_Broke I think $1253 sqm is a fair price for Leppington at the moment but its definitely not a bargain as there are other blocks that are slightly cheaper. I m forecasting blocks would cost $1,350 sqm when I settle in more than 2 years time but I don't have a crystal ball.

The Sydney market makes me nervous but there seems to be a lot going on in Leppington in terms of Infrastructure so there is some upside. In saying that, I wouldn't pay $1,253 sqm for a block in Leppington if I had to settle this year. I m hoping the area will attract a lot of FOMO buyers who want to purchase a house and not apartment in the years to come.

 

Are you sure in Rouse Hill? Can you please share the links or details? I'm looking at that side but to me its not rate in Rouse Hill may be just next suburb (Box Hill). Btw, have a look at the Gables (Box Hill) its one of the biggest masterplanned community, they are selling land only currently, i have posted in separate thread have a look.

 

What's the land price and what suburb? "Near Rouse Hill" means nothing. I know Rivo has sold out pretty quick in that 650k price point. Box Hill too.

 

I wouldn't touch the gables. Way too far and way too many investors who I'd buy off when they can't settle. I honestly think gables will be the biggest blood bath in any area when land only is starting at 550k

 

Its between 445-489k land price in Riverstone about 1.2km from the station. Riverstone would be the suburb that could get the flow on effect. Kellyville is just 10km away and the land price is 880k now, pretty much double.

I never said it was in Rouse Hill, but its approx 5km from Rouse Hill which I believe is close. Its around the Garfield Rd East area where all the other developments are happening. Box Hill we only have packages from 871k. I can't share the link as its an agent portal.

 

Personally I would avoid this like the plague. The first (often only) portion of the market at risk in a bubble is areas in which new development has been strong. Off the plans, house and land packages on the city fringe - for many reasons, they're vulnerable.

One huge factor is developer discounting. If these areas are flooded with new supply and demand slows, you will get a lot of developers holding assets and becoming impatient with a lack of sales. Because they're usually bigger operations than an individual, they then have the power to discount - we're already seeing this in CBD apartments with thing like "39% off fire sales", free BMWs etc.
That developer discounting causes individual investors to struggle, because they can't compete.

A lot of these areas are also unpopular with buyers, who may only be choosing them because they're all they can afford. City fringe areas are a big one here: people live an hour from the city because they have to, not because they want to. If other suburbs see any correction, even a mild one, those buyers are likely to choose more established suburbs, causing a buyer exodus.

You also have the stability problem. Established suburbs tend to be dominated by longer term owners - people who've often paid off mortgages, giving those buyers less incentive to panic or sell or discount. Another thing is that buyers in established suburbs tend to be more financially sable and on higher incomes, decreasing any chance of a panic sell.

In Ireland and USA, fringe suburbia and new development areas made up the vast majority of price falls, often losing almost all their value. Right now, these assets represent the absolute highest risk in my opinion. You are much better off sticking to good quality, established homes in sought after areas dominated by owner-occupiers. Avoid development heavy areas.

Places like Oran Park, Leppington - have a look at what's on offer there right now. These places are already absolutely drowning in stock. That suburb on allhomes has 144 listings and a mere 7 sales in 4 weeks. Other nearby suburbs are in a similar state. Personally I think the growth prospects for that whole area are weak at best.

 

Yes, call this utter BS. There is biggest success example of masterplanned community ~ The Ponds. At time of investment it was pretty much similar thinking amongst most ..too far..lots of housing..over supply n rubbish.