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How do house-and-land packages work?
One of the most straightforward ways to build a new home is to purchase a house-and-land package.
House-and-land packages are usually offered by developers that have bought large areas of land and subdivided it into smaller lots to create a housing estate. These are often located in new suburbs, which are usually found at the edges of cities, in smaller regional towns, or in areas that were once occupied by rural properties. Sometimes, although less often, new suburbs are created when former industrial land closer to the city centre is converted to residential.
House-and-land packages are often created with a specific block of land in mind, with the house designed to best take advantage of the orientation of the lot. Alternatively, buyers may be able to select the exact block of land they want, choose from a range of approved designs, and customise the home to suit their needs.
When creating a new housing estate, developers usually create new roads and install services like water, electricity, gas and sewerage. Homes usually already have development consent, meaning minimal delays before construction can commence. Some homes are offered already built or under construction, meaning all a buyer has to do is move in.
Prices for house-and-land packages are usually fixed, meaning buyers won’t have any unforeseen costs during construction. These homes are usually more affordable than a custom-designed home because builders are usually constructing many homes in the one area at the same time, and can work more efficiently and quickly. Because house-and-land packages are often further from city centre, prices can be quite affordable compared to new and existing homes in inner suburbs.
How the property cycle works and how to use it to your advantage?
What is a property cycle?
A property cycle starts with a boom, when prices and demand are high amid limited supply.
The boom is typically followed by a downturn, which can happen due to an oversupply of properties in the market, a reduction in borrowing capacities, or a combination of factors. In this phase, prices may fall, and demand is low.
With fewer buyers in the market, prices start to level off or fall – this is known as the stagnation or stabilisation phase.
Slowly, the property market starts recovering and more investors and buyers start entering the market, which is the upturn phase that leads to the next boom: the start of a new cycle.
Dr Nicola Powell, Domain’s chief of research and economics, says there’s a widely-held view that Australian property prices go through boom and bust phases when in fact it’s less dramatic than that, with ups and downs indicative of a healthy property market just like the expansion and contraction of an economy.
“In reality, what you tend to find is that prices, particularly in our big capital cities, go through substantial periods of an upswing, when we see rapid gains in property prices, and then they move into a contraction phase of the market,” she says.
What drives a property cycle?
There are many different drivers says Powell, with population growth, interest rates, the availability of credit, tax and policy settings, health crises, big spending from federal government on infrastructure and buyer incentives all in the mix.
One of the factors that contributes to a downturn can be the loss of borrowing power when interest rates go up or when lending standards are tightened.
When prices stabilise, the Reserve Bank and economists tend to change their outlook and we hear talk of lowering rates or relaxation of lending criteria.
Is there just one property cycle in Australia?
Powell is at pains to point out there’s no one single property cycle in Australia.
“A property cycle happens at a capital city level, but it also occurs at a sub-geographic level as well,” she says. “Suburbs across the city move through the property cycle at different paces, and they can react to different things occurring such as infrastructure, investment and things like that, which can change the demographics and the amenities within a particular area.”
Media headlines often talk about the property market as if it were a single market, but while general in nature, this coverage can still be useful when combined with analysis at a more local level.
“I think the broad headlines that cover your city give you a good finger on the pulse for where the property cycle is,” says Powell. “But I think that local knowledge and research on your local area is very important because it’s really hard to pick a peak and it’s really hard to pick a trough of the market.”
Grantham says talking to real estate agents or buyers agents can be helpful because they’re “on the ground” and can provide insight into what’s actually occurring as opposed to what you’re hearing in the news.
How understanding property cycles can help your property decisions
While buying low and selling high has long been the dream for property owners, it’s difficult to predict how long each phase of a property cycle will last, and therefore difficult to “time the market”.
“When you look at the price cycle overall what it tells us is it’s not about timing the market,” says Powell. “It’s actually time spent in the market that counts.”
That said, there can be some advantages to buying during the slump and stagnation phases.
Powell says one of the big benefits that comes with buying in a downturn is the fact that you usually have a bit more time on your side and can therefore be a bit more strategic in the decisions you make.
Grantham points out there’s likely to be more property to choose from, so buyers may be able to tick more items off their wish list.
The beginning of an upswing is a prime time for builders and developers to jump into the market, says Grantham.
“Everyone is sensing things are changing, consumer confidence is increasing and people are trying to get back into the market,” he says. “If you can buy and sell in the same market it’s the best way to protect yourself during an upswing.”
On the downside, when you’re buying in the latter stages of an upswing the fear of missing out can take over rational decision making, says Powell.
Ultimately there’s no substitute for doing your due diligence and sticking to your budget regardless of what phase a property cycle is in.
“Whatever market you’re buying in caution needs to be taken,” says Powell.
Source: Domain Website
First Home Buyer Choice
http://affordableplusconveyancing.com.au
The NSW Government now provides first home buyers purchasing properties for up to $1.5 million the ability to choose to pay an annual property tax instead of stamp duty. The property tax will only be payable by first home buyers who choose it, and will not apply to subsequent purchasers of a property.
This initiative will lower the up-front costs of home purchases and help to boost the rate of home ownership in NSW. With rising home prices, home ownership has declined from around 70 per cent in the 1990s to around 64 per cent today. The decline in home ownership has been particularly evident among younger and lower income groups.
The savings required to meet the up-front costs of a home purchase are an important barrier for many would-be purchasers. Removing the obligation to pay stamp duty will lower these up-front costs and cut up to two years off the time needed by many first home buyers to save for a home.
Existing stamp duty concessions for first home buyers are available for purchases of up to $800,000, and these concessions will continue. The property tax option will be available for properties for up to $1.5 million, helping a broader group to become first home buyers. In total, these measures will offer support to about 97 per cent of all first home buyers, or about 57,000 people per year.
Source: Revenue NSW
From Saturday 12 November 2022 first home buyers can opt to pay land tax after historic stamp duty laws pass
First home owners who buy a property this weekend can choose to pay a land tax rather than stamp duty after NSW Premier Dominic Perrottet’s long-touted property reforms passed parliament.
While the new property tax scheme will not be fully operational until January 16, any first home owners who buy property this weekend will be able to seek a refund on their stamp duty before switching to the annual tax.
The historic new laws will allow a first home buyer to opt in to a land tax for properties under $1.5 million and would pay an annual levy of $400 plus a 0.3 per cent tax on the value of their land.
Property tax rates will be indexed so that the average annual property tax payment grows at the same rate as gross state product (GSP) per capita. However, to avoid bill shock, annual increases will be capped at 4 per cent.
Eligible first home buyers will be able to access the scheme from Saturday and, while they will be required to pay stamp duty on purchases made until January 15, they will then be able to apply for a refund of their stamp duty if they choose to opt into the annual fee.
Source: Sydney Morning Herald
How to lose $75K deposit, a lesson from Qld
Article published in news.com.au
A Brisbane couple has been left devastated after losing their hard-earned $75,000 house deposit to a “perfect storm” that involved “greedy” sellers and a screw up from their bank.
Mark 30, and Maddie 27, are warning other aspiring homeowners what to look out for after losing a huge chunk of their cash to unfortunate circumstances.
The pair, who have been together for more than 10 years and recently got engaged, were looking to buy a home in Brisbane where they could start a family.
They offered $965,000 for a 564 square meter two-story house in Jindalee, with four bedrooms, two bathrooms, and a pool.
The sellers gladly agreed however at settlement on October 20 their bank, Westpac, wasn’t ready in time.
As a result, the deal lapsed and legally the sellers were entitled to their entire deposit.
Instead of listening to their pleas to extend the deadline, the owners were happy to pocket their $75,000 and sell to somebody else afterwards, according to Mr Trau.
“It was part of the money we’d been saving up from the beginning of our working lives,” he told news.com.au.
“It [the $75,000] was everything. We’re not from wealthy families. We haven’t had any handouts from family, no second cousin’s aunty has passed away and left us a massive inheritance. We’ve worked hard for 10 plus years.”
Mr Trau said he was making “a number of frantic calls” as he saw the settlement deadline looming at the end of last month.
“My solicitors had said if we don’t settle in time — as in Queensland contracts, time is of the essence — you can be liable to forfeit your deposit,” he explained.
In most other Australian states you have a two-week grace period if your settlement goes under. Not so in Queensland.
He also made two pleas to the sellers, first for a week extension, and then a single day extension. Both were rejected, causing him to suspect an “ulterior motive”.
Unfortunately, the settlement lapsed.
“It wasn’t until the next day at 11am Westpac said they were ready for settlement,” Mr Trau recalled.
By then, it was too late. The sellers were already looking at other offers, he was warned.
The sellers then made a request for the $75,000 belonging to Mr Trau and Ms Goyder to be released to their accounts.
“People when they see money signs in front of their face can throw all humanity out the window, and not worry about anyone else but themselves,” Mr Trau said.
“Especially nearer to the end when there was an indication that we needed a slight extension and they saw the chance to get more money.”
he property ended up selling for $1,030,000, with the date of the purchase listed as October 20 — the same day Mr Trau’s deal feel through.
He suspects the sellers must have signed their new deal later that night.
Overall, the sellers walked out with an extra $140,000 in their pocket compared to the original deal — $75,000 from the deposit and an extra $65,000 from the higher purchase price — while Mr Trau and Ms Goyder were left destitute.
“It changed dramatically what we were able to afford,” he said.
“We were very close not having somewhere to live for a day or two.”
The couple, with Mr Trau working as a public servant and Ms Goyder a primary school teacher, faced homelessness as they couldn’t afford anywhere else and planned to surf couches from friends and family.
Comment: we understand later that Westpac has compensated the couple for all their loss and admit that admin error in their part.
Australian Housing Outlook 2021-2024
Purchasing a Property Tips
1. Research the market value in advance
When it comes to the sale price, it pays to do your research. Knowing the correct market value of a property will allow you to negotiate the price with confidence. Speak to your broker to access a property and suburb profile report which will provide valuable insights so you can make a fair and educated offer that reels the vendor in, whilst avoiding overspending.
2. Know your ceiling price
Before you begin negotiating, it’s important to know your spending limit. The easiest way to find out is to speak to your mortgage broker who can research your borrowing power. This is the amount a lender may be willing to let you borrow, given your personal financial circumstances.
3. Be confident of your finances.
4. Understand seller’s motivation: find out why the vendor is selling. If the sale is time sensitive you may be able to offer a shorter settlement period for discounted price.
5. Use your building and pest inspection report as a negotiation tool:
If your building and pest inspection come back with few surprises, it may give you leverage to get the vendor to lower the price.
6. Speak to your Conveyancer:
Sending Contract for sale for an insight review can crucial in allowing you to negotiate , amend or add some terms can give you peace of mind.
Call us to see if you are entitled to free Pre Auction Contract Review. Our phone number: 02 9601 1392 or Mob: 0420 685 856
Selling Your Business? Avoid the following:
1- Misleading and deceptive conduct:
The false representations are often made in conversations leading up to the signing of the contract.
Tips
Make sure that any conversation is recorded in writing. An email after a conversation confirming what was said is best.
Do not provide any information which is not 100% factual and cannot be supported by documents.
2. Restraint of Trade clauses
A restraint of trade clause is one where the seller is restrained from opening (or sometimes working in) a similar or competing business for a specific timeframe in a specific geographical area.
Tips:
Ensure that it is clear in the contract of sale what type of activity would breach the clause – the more detail the better.
Conclusion
The top ways to minimise the risk of litigation are as follows:
Ensure that the contract of sale of business is well drafted and clear. It is important that it clearly states in plain English (not legal jargon) what you understand to be the agreement.
Document everything in writing, even informal conversations with a prospective purchaser.
Do not say or provide any information which cannot be supported by facts and existing documentation.
How much an Auctioneer costs?
A good auctioneer can mean the difference between a successful sale and an OK sale or no sale at all. The best auctioneers can create a lively atmosphere and a real sense of urgency, which encourages buyers to bid above your reserve price. Under the right circumstances, selling at auction could help you realise a higher sale price than a private sale.
If you have questions like, ‘how much does an auctioneer cost? Or how much does it cost to auction a house?’ then you should be aware that there is no set fee or regulated amount auctioneers charge. Each state does however have different rules and regulations around property auctions.
You can expect an auctioneer to charge anywhere from $400 to $1,000 to sell your home. The variance in these figures will come down to how experienced your auctioneer is and where you live. $1000 is usually at the top end of the scale – a fee an experienced auctioneer with a record of getting high bids could charge.
If you come across an auction service that is described as “free,” it will come out of the commission you pay your real estate agent. With that said, if you’re thinking of taking your property to auction, it’s a good idea to find out from your agent if the service will be free or if it will be an extra charge.
* You need a Conveyancer? Call Us Now! Office: 02 9601 1392 Mob: 0420 685 856
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