Everything you need to know about purchasing a land lot

Market Insights
5 years ago
6 minutes

When it comes to securing a home or land lot, there are different views on which one comes first. I wish the answer was easy, but it will depend a lot on what your key drivers are.

In a perfect world, you should always choose your dream home first. Unfortunately, what can tend to happen is that you fall in love with a particular home, only to discover you cannot find a block of land to build it on that’s within your price range.


The great part of buying a home lot is you can define the attributes that you value. But it’s worth considering that most of these items impact on the cost. Some items of key consideration should comprise:

Some people can become despondent when they see the starting point price of a lot in a new land estate. But whilst several lot types demand a premium, there are examples where certain land lots can be far less expensive. For example, when they are positioned adjacent to an undesired element, such as train lines, electrical pits, schools (due to traffic), and bus stops.


Whilst a land lot in a specific release is important, it is just as important to know where you are relative to key items in your life. For example, schools, parklands, wetlands, playgrounds, and so on.

If you achieve this it can help you spend less on your land lot. For example, if you are near a park, is the size of your backyard really important? Proximity to a school can help reduce the usual petrol costs of longer pick-ups and drop-offs. And apart from the savings themselves, either riding or walking are better for your health.


Generally speaking, there are two key dimensions relating to a land lot that you need to know:

These two dimensions are critical to ensuring you can build your dream home on your lot. Make sure the dimensions are parallel, otherwise it will impact what home you can build. And it is critical to understand what home fits on what size lot. A 16m wide home will NOT fit on a 16m wide lot. You need to understand side setbacks and whether the land estate will allow you to build any part of your home on a boundary. Land estates usually allow garages to be built on boundaries, however not any other side of the home, due to there being too much of the home on the boundary and impacting the neighbours too much.


Once you’ve understood the lot dimensions you need to think about the building envelope. This is key to ensuring you comply with potential limitations that exist on the desired land lot. The different elements could comprise:


History shows us that homes grow in value over the long term. The 1990s until the mid-2000s were marked by quite high housing price inflation, of 7.2 per cent per annum, on average, in nominal terms.

For most people, a home is the biggest purchase they make. So, when you do buy it is important to take into consideration things that will maximise your resale value when you finally decide to move. Several factors can influence this, including good transport connections, being included in a particular school zone, proximity to shops, hospitals, childcare facilities, and so on.

Also, make sure you understand what amenity the immediate project will deliver versus others nearby. This will help you put everything in perspective and help you with your ultimate purchase.


Another key reason you want to know what home you are purchasing before choosing your land lot is that you want to maximise your home’s solar orientation. Ideally, you want your yard and alfresco area facing north. This will maximise the amount of sun your outdoor dining area receives during the day. Below is a good example to illustrate the point.


As you can see, with the above land lot based on the two respective floor plans, for optimised solar orientation, two different lot orientations are required. This is one key reason you do want to know the home before you purchase your land lot. You can obviously select a home that optimises your solar orientation if you have purchased your lot first. The only downside is you may need to select home designs that are not your favourite options. Buying the land lot first starts limiting your choice.


The nature of how the lot is prepared is another key consideration. It is not uncommon for developers to deliver land lots that have fill. In most cases, it will fulfil Level 1 Compaction. However, the issue can be the home builder does not credit the report and will seek their own independent report. This is understandable as ultimately, they need to deliver a home they can confidently give a warranty on.

If you are dealing with one of the bigger builders in Melbourne they may know the soil conditions and be able to give you some insight into sight costs. Key issues that can significantly impact your site costs are fill, fall and soil conditions. It is best to know what these costs are before you secure a land lot. There is nothing worse than buying a lot to learn later that site costs are in the tens of thousands. This can end up blowing your budget and mean you have to sacrifice things you have dreamed of.


This is one that a lot of people overlook. The fall or slope in a lot can have major impacts on your purchase:


You need to know if a land estate specifies a build timeframe. Some projects do not specify anything, whilst others request you build your home by a certain deadline. This does not matter if it aligns with your plans, but it can be an issue if you plan to save and build in the future, yet the project has a clause requiring you to build your home within 12 months.


1. Kohler, M., and Van der Merwe, M., Long-run Trends in Housing Price Growth, Bulletin September Quarter 2015, page 22.

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