To say that Australian home prices have been increasing is a gross understatement. Since 2000, the cost to own a property in the country has never changed its upward trajectory. The country was unaffected by the global housing crisis, which dropped home prices in the United States by up to 80%.
However, recent statistics show that many scorching major Australian cities are beginning to cool down. Although the countrywide housing demand from January to July 2018 increased by 5.2% than that of the period prior, are houses becoming more attractive than pieces of land for sale around Whittlesea, Victoria, and other growing areas?
Not so fast. Home prices might be starting to fall, but land might still be the better bet for buyers to get a foothold in the property market. If you’re planning to enter the real estate industry one way or another, here’s why you should strongly consider a vacant parcel than a house:
It’s Still So Much More Affordable
Vacant land costs significantly less than any dwelling. This statement is valid anywhere in the country. Considering that house prices remain out of reach of many individuals, land is your best hope to take the first step toward home ownership. You will still need to put a deposit, but it’s easier to save for a vacant parcel of real estate.
Furthermore, most buyers are more interested in house-and-lot packages than empty pieces of land. With less competition, prices can stay low for long periods.
It’s Likely to Appreciate Quickly Over the Long Term
Historically, land tends to increase in value over time. Many factors can cause depreciation, but property in a developing area that’s becoming a more desirable place to work and live can appreciate significantly and passively. The best part is that you hardly need to do anything to build equity on it. Also, the interest rate, insurance and taxes attached to vacant land will be lower.
The only caveat is that a lender might find vacant land riskier security than one with a dwelling constructed on it. In turn, you might be asked to pay for a relatively greater per cent of the property’s value upfront. Nevertheless, you can grow your wealth more quickly through land appreciation while using the time to save more money to fund your home construction project.
It’s Low-maintenance
Usually, the only maintenance that vacant land needs is occasional lawn mowing. Real estate experts aptly call it a “hands-off investment” because you won’t be pressured to fund costly, periodic improvements.
Moreover, you don’t need to hire someone to watch over the property on your behalf. Nobody can steal your land, so your investment will stay safe whether you actively manage it or not.
It’s Highly Versatile
As the landowner, you can do whatever you please to it for as long as you comply with the local building codes and zoning regulations. You can build your dream home, construct property for rent, or sell it to an interested party to turn a handsome profit. With vacant land, time is on your side to think about how it can benefit you the most.
If you wish to finally have your own primary residence and have the means to buy a house and lot, go for it. However, if you’re not in a hurry to build a dwelling or lack the resources to purchase one, an empty parcel is a viable option. Even if home prices continue to drop, the charm of vacant land will never fade.