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House & Land Packages Victoria & Melbourne | Property Investment


Strong population growth and increased demand have resulted in low vacancy rates, higher gross rental yields and strong capital growth for Melbourne house and land packages in Victoria.

Melbourne always ranks highly as one of the world’s most liveable cities in the Economist Intelligence Unit's liveability poll and the cafe culture, restaurants, culture and night-life is a strong drawcard.

Here are the important factors to consider when buying a Melbourne house and land package for investment purposes in Victoria.

Location


Houses are generally rented by couples, families and empty nesters seeking properties close to schools, universities, parks, cafes, restaurants and public transport. Traditionally, new house and land developments are located in areas that have a high rental demand.

It is important to investigate your desired Victoria location and check the:
  • average rent and yield is of similar new houses in the area
  • capital growth of the region you wish to buy a new house in
  • changes to infrastructure or new developments planned that may affect the new house you wish to purchase and
  • estimated population growth and demographics of the location.

Remember investing in property is a long term strategy and the property market is a cyclical market so make sure you check previous reports as well as current reports and projected planning reports for the area.

Rental income and yield


Houses may attract a different demographic than apartment dwellers such as couples, families and retirees looking for extra space and pet-friendly dwellings. The increased privacy and additional outdoor space such as a garden or courtyard are also attractive to prospective tenants.

Research rental reports in the Melbourne region you wish to buy an investment property in and find out the average rent for other similar new houses and the demographics of your desired location. Historically, new house and land developments that attract a high rental demand in Melbourne have the following features:

  • within 10kms of the Melbourne CBD
  • access to nearby schools, universities or TAFES such as Monash University or Melbourne TAFE
  • within a short distance to one of Melbourne’s many shopping precincts
  • close proximity to one of Melbourne’s beachside suburbs such as Elwood and St Kilda
  • located near restaurants and cafes such as Carlton or Fitzroy
  • near to public transport and highways and
  • located in a region with a diverse industry and employer base.

The increasing population, demand for houses and historic low vacancy rates in Melbourne is pushing the price of rent and gross yields to an all time high.

Capital growth


It’s important to research the capital growth potential of the area that you are planning to buy in. Houses generally have a greater potential for capital growth than apartments because of the land content.

The advantage of buying a house is also the greater potential to add value by landscaping the garden, restoring the roof or painting the property and greater control over the property. Renovations to the property are not restricted by an Owners Corporation as in the case of apartments, units and townhouses but you do have to comply with local planning laws.

Capital growth in Melbourne for houses may be affected by the following factors:

  • The location of the property. Historically, the best performing houses in terms of capital growth have always been within 10km of Melbourne.
  • If the house is bought off the plan and there is a long settlement period, there may also be potential for capital growth when the property is finally completed.
  • Whether there are any major developments or infrastructure planned for your Melbourne location such as a shopping complex or a new highway.
  • Demographic changes to the region increasing a demand for certain types of property.


Tax advantages


Many property owners are losing potential tax exemptions by failing to take full advantage of a property’s tax depreciation potential and tax credits. One of the major incentives for buying a new house off the plan in Melbourne is that there is no stamp duty which can save you thousands of dollars.

If you own an investment property, you may be able to deduct capital works deductions which apply to the period your property is rented or is available for rent and are generally spread over a period of 25 or 40 years.

Tax credits are available to any property owner who obtains assessable income by way of rent or operates a business from a property. These can include:

  • insurances;
  • repairs and maintenance of fixture and fittings;
  • loan interest and related bank fees;
  • property management fees;
  • any legitimate expense incurred in running your investment property;
  • depreciation – the ability to claim the cost of replacing fixtures and fittings such as carpets, curtains and so forth in advance of actual replacement;
  • capital works deductions such as installing a pool, removing an internal wall or adding a bathroom.

Consult your accountant before buying an investment property to find out all the possible tax deductions you may be entitled to.

Costs


As well as the usual costs of buying an investment property, a house owned for investment purposes is also subject to land tax in Victoria and it is calculated annually as at midnight on 31 December of the year preceding the year of assessment (i.e. 2010 assessment is based on land holdings at 31 December 2009).

A house will not incur any strata fees and generally does not have the high maintenance costs of an apartment such as pools, gyms and landscaped gardens. When buying a new house and land package as an investment property, additional expenses may include:

  • conveyencing
  • loan application and valuation fees
  • mortgage insurance (if applicable) and
  • a tax depreciation report

Other ongoing expenses include building and home contents insurance, council and water rates, property management fees and landlord’s insurance.

Melbourne’s ‘cafe culture’, strong sporting culture, love of the arts and night-life and tenant-friendly lifestyle have resulted in historic low vacancy rates and gross rental yields. Astute property investors understand the charm and attraction of Victoria land and house packages and the potential for capital gains growth. There is also a bigger resale market for houses as they are attractive to both investors and owner occupiers alike.

Find Investment Property has listings for some of the Melbourne house and land developments currently available so start searching to find your next property deal and add a Melbourne off the plan property to your investment portfolio.


Find Investment Property is the best property investment resource online and features the latest new apartments and off the plan investment properties. Whether you are looking to buy investment property or looking for the best property investment research, Find Investment Property has the real estate investment properties you need.