Thinking of buying land in Melbourne?
We get it. Imagine building the house of your dreams with the ideal floor plan suited to your lifestyle. Buying and building new gives you the freedom to choose.
However, it comes with its set of processes, just like when you buy a property. You need to get your finances pre-approved, sign a contract of sale, finalise the contract then pay your deposit… to start!
But don’t worry, let’s go through the step-by-step process of buying land in Melbourne and answer other questions you might have.
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How do I buy land in Melbourne?
1. Getting your finance pre-approved
A pre-approval from the bank is an indication of your borrowing power. However, it’s not a guarantee of the loan.
You need to get pre-approval for your home loan as a crucial initial step in buying land. Sellers and agents also tend to favour buyers who already have pre-approval. It eliminates the waiting period and shows that the buyer is ready and willing to make the purchase.
For you, the buyer, it also gives you more confidence with your budget when shopping around for the land. Regardless whether you’re looking for cheap land for sale in Melbourne or pricier lots, understanding your finances is a key foundational step.
2. Signing and exchanging the contract of sale
The contract of sale is a document stating the terms and conditions of the sale as well as the price agreed upon by the buyer and seller.
It is usually either a conditional offer, where there are specific conditions for the sale, or an unconditional offer, if the buyer already has the funds to make the purchase.
Sometimes, your lenders might want to value the land before they can offer an unconditional sale.
Once everything is agreed on, both the buyers and sellers will sign and exchange the documents. You may be liaising with a real estate agent for this.
3. Paying the deposit on the land
When you pay the deposit on the land, presumably between 5-20% of the purchase price, the deposit will be held a trust account which the seller on’t be able to access until the process is settled.
4. Hiring a solicitor/conveyancer
After settling the deposit, you will need to hire a conveyancer or solicitor to help with the legal transfer of paperwork. If there are any particular circumstances you want to have stated in the contract, now’s the time.
5. Finalising the loan
To finalise the loan, you will need to sign the documents given by your lender. You can also speak to Soho Home Loans to find a mortgage broker who will help you with this process.
6. Signing the transfer of loan document
Finally, you can sign the transfer of land statement which will then be registered with the local Land Titles Office/Register of Titles. This is how the land is legally transferred from the owner to the buyer.
7. Register the land title
After the purchase settlement and once your home loan is active and in place, the property is officially yours! There will be an official record of your ownership of the land kept by the Land Titles Office/Registrar of Titles. Congratulations!
How much deposit do you need to buy land Victoria?
The deposit on buying land in Victoria varies. Some lenders will loan enough so you only have to pay a 5% deposit. That is usually for land sizes up to 11 hectares.
For bigger plots of land, a 20% deposit is what is normally required.
How much does a land cost in Melbourne?
According to Statista, the cost of a square metre of land in Melbourne, Australia, was $882 in 2021.
That same year, the Real Estate Institute of Victoria recorded a median price of $490,000 for land in metropolitan Melbourne and $240,000 in regional Victoria.
What do I need to know about buying land in Victoria?
One of the special things to note about buying land in Victoria is about getting an unconditional loan from lenders. If the land is registered, the lenders can value the land and potentially offer an unconditional loan.
Registered land will be connected and have infrastructure already, so once you own the land and get council approvals, you can start building.
However, unregistered land doesn’t usually have connected services or infrastructure which can take months or years to finalise. So if you’re getting pre-approval, there’s a possibility it may expire before you can build infrastructure on the land.
Other things like lender policies and property values may also change between getting pre-approval and building infrastructure.
Is it a good idea to buy a land?
Buying land can be a worthwhile investment if chosen correctly. Just like property, we want land to remain in good condition and appreciate (grow in value) over time.
Many investors and property experts say buying land and building on it usually allows you to sell it at a higher price in the future.
Of course, you need to remember that construction takes time and effort. As does getting approval from councils to build, as well as getting a loan for the construction process.
Is buying land better than buying a house?
Generally, buying land will cost less than buying an existing house. But you still have to build on it, which normally requires council approvals and construction loans.
So if you have the time for it, as well as the money to juggle the construction costs along with your rental payments, it could be a more worthwhile investment to buy and build on land.
If you’re on a budget, you can also look for cheap coastal land for sale if you’re a beach lover, or in areas where land is cheapest to buy right now.
Just make sure to do some research on the property market before making any big decisions.
Is it cheaper to build or buy in Australia?
According to Finder, the short answer is yes; in the long run, it is cheaper to build than to buy. In their findings, the only city where it would be cheaper to buy an existing house is in Perth.
Even though the numbers encourage buying land and building on it, there’s more to it than costs. You may be subject to a long construction period and it isn’t easy to find vacant land in central areas like Melbourne.
Do you pay stamp duty on land in Australia?
The amount you pay on stamp duty depends on the location in Australia. But generally, it is between 3-4% of the land value.
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