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Why high quality Sydney house & land packages are positioned for capital growth

The Australian house and land market is booming, particularly in lifestyle-focused locations within high demand cities like Sydney. Demand growth is being driven by a desire for space, convenient locations near cafes and restaurants, strong travel connections, and access to green areas such as parks. There’s also a growing awareness that high quality house and land packages are well positioned for long term capital growth. We discuss why below.

Australian residential property has averaged a total return of 10.5% p.a. over the past 20 years according to Russell Investments. It’s a strong performance compared to most other asset classes. However, it’s worth highlighting that the real engine behind this strong performance is the appreciation of the underlying land value. Land is a scarce resource which appreciates in value when the population grows as has consistently been the case in recent decades. As a result, land values have been growing at a much faster rate than the total property return rate, and are likely to continue doing so.

Underlying land value appreciation is the key reason why high quality Sydney house and land packages are positioned for long term capital growth. One of the strongest drivers at play in this market is the narrowing of the discount to fair land value. House and land package buyers often purchase their land component at an attractive price compared to the rest of the Sydney property market. As the area around the house and land package location becomes more established, land values often move upwards to reflect the growing value of the area. This is often referred to as the gentrification of a suburb and it is well worth being aware of for house and land package buyers.

As Landen’s Director Rashed Panabig explains: ‘House and land package buyers in high quality areas such as our Rouse Hill properties benefit from the market’s long term land price appreciation as well as the value creation effect of the area they are living as it becomes more established. It’s a powerful combination which adds up to strong long term capital appreciation potential.’