The thought of purchasing land and a new house to design completely to your specifications is an exciting process. There are many offers for house and land packages just outside of Australia’s capital cities, which may sound like a great idea because urban sprawl means that your land should end up raising in value within the next few decades. However, you should be wary of certain house and land value traps that are becoming ever more popular in Australia. Some property developers and buildersoffer generous incentives to new home buyers, like new cars, cash-backs, free landscaping, etc.

Why are incentives bad for the housing market?

Essentially, these giveaways don’t reduce the face value of the house and land contracts at all, but in fact it will increase the amount of funds new home buyers will contribute by 15 percent. The price of the contract on the package is larger, so the stamp duty is increased, but the banks don’t see the property value at any higher rate so they’ll lend at a lower level, meaning the borrower will have to pay an increased deposit.

It is important that home developers are transparent in their dealings of land price deductions. If you’re a new homebuyer, here are some ways to avoid the pitfalls of a house and land package trap.

Base price versus final price

When looking at house and land packages, you might be blown away by the lovely display houses shown to you by builders. The upside is that these properties are bound to be modern and lovely, whereas buying an established house might mean lots of renovations due to out-dated furnishings and fittings. But make sure to ask the builder or sales representative what comes standard with the house so you don’t end up paying too much to upgrade.

Take your time if you choose a house and land package. Don’t rush it. Make sure you are dealing with a transparent company that will be quoting you the final price of the home and not just the base price, because you could end up spending another $200,000 on the final sale.

Are you paying stamp duty?

Talk to the builder or developer of your contemporary home to determine what you are paying stamp duty on. If you are buying a package, you could be paying stamp duty on the land only. However, if you purchase a completed house, you’ll be paying stamp duty on the total amount.

If your home is still being built when you purchase the package, beware of paying progress payments. This means you’ll be paying interest on a mortgage for a house you wont be living in for up to 12 months.

Don’t forget to consider your block

You might get fooled into thinking that you can have a big house with a pool and whatever other amenities are shown on the display house. However, you need to be wary of the land you are working with and the local council regulations. Before buying blindly, consider things like:

  • Are there design limitations in the estate block that your land is located in?
  • Where are the sewer lines located? Will they impede upon any work or additions to your home, like a shed or a pool?
  • Will you meet local bushfire requirements? Do you need storm water drainage to the street?
  • Where is your block in relation to the sun and wind?
  • Are there pre-determined rules on the placement of your home?
  • Where can you put your driveway?


In the end, when determining if a house and land package is right for you, it’s important to work with trustworthy builders. You can rely on Rawdon Hill. Contact us today to learn more.