Bought a House and Land Package, but Similar Properties Are Now Cheaper?

You’ve signed a contract for a house and land package, with settlement expected in the next one to two years. But the market has changed, and you’re now seeing similar properties advertised for less.

Have you paid too much? Could you lose money? And what happens if your finance no longer stacks up when settlement arrives?

If you’re in this situation, don’t ignore it. Buying a house and land package is a major financial commitment, particularly when settlement is still a year or two away. Property markets can change, and the value you expected when you signed may not be the value a lender sees later.

1. Check whether the cheaper properties are genuinely comparable

Before concluding that you overpaid, compare like with like. A package advertised for $30,000 or $50,000 less may not be directly comparable to yours.

• Location: same suburb, estate and stage of development?
• Land size: similar block size, frontage and orientation?
• Builder and design: comparable floor plan, build quality and specifications?
• Inclusions and upgrades: flooring, landscaping, fencing, driveway, air conditioning and other inclusions?
• Timing: same construction and settlement stage?
• Incentives: is the cheaper price genuine, or supported by rebates or limited inclusions?

An advertised price is not always the final price a buyer pays. But if several genuinely comparable properties are consistently cheaper, that is useful market information and should be taken seriously.

2. Review your contract before making any decisions

Once contracts have been exchanged, your options can be more limited than they were before signing. Depending on the contract and the laws that apply in your state or territory, failing to complete may expose you to consequences such as loss of deposit, damages or other costs.

Ask your legal adviser to clarify your obligations under the land and building contracts, whether any conditions or cooling-off rights remain, what happens if finance is unavailable at settlement and what consequences may apply if the purchase does not complete.

3. Speak to your builder or developer

If your research suggests your package is now priced above genuinely comparable offerings, you can still approach the builder or developer for a discussion. They may not be obliged to reduce the price, but there may be other areas worth exploring.

Before accepting a variation, have your conveyancer or solicitor review the proposed change and its implications.

4. Review your finances and stress-test your borrowing capacity

This is especially important when settlement is still one to two years away. The borrowing capacity you had when you signed may not be the borrowing capacity you have when the property is ready.

Interest rates can change. Living expenses can rise. Employment or income can change. You may also take on additional debts before settlement. All of these can affect your ability to complete the purchase.

What if interest rates increase before settlement?

If you expect to borrow $700,000, ask your mortgage broker to test what happens if rates are 0.50 percentage points or 1.00 percentage point higher than you originally expected.

• Would you still satisfy the lender’s servicing requirements?
• Could you comfortably manage the repayments?
• Would you still have sufficient savings for other costs?
• Would your overall financial position still support the loan?

What if the bank valuation comes in lower than your purchase price?

A lower valuation can create a funding problem even when the contract price does not change.

This does not automatically mean you have lost $50,000. But if the lender calculates the maximum loan using the lower valuation, you may need more cash than expected, a different loan structure or another lending solution. Approval is not guaranteed.

What if similar properties are genuinely selling for less?

If actual comparable sales are lower than your contract price, a valuer may take that evidence into account. Asking prices alone do not prove that your property is worth less, but genuine comparable sales matter.

Review how much additional cash you could access if there is a funding gap. Do not assume you can simply borrow more because serviceability, deposit position and lender policy will still apply.

5. Don’t assume property prices will recover before settlement

Property prices may recover, remain flat or fall further. No one can guarantee which outcome will occur in your suburb or estate during the next one or two years.

Instead of relying on a forecast, focus on the numbers you can assess now:

• Your total contract price.
• Comparable property sales.
• The loan amount you are likely to need.
• Your ability to manage higher repayments.
• Your available cash if the valuation is lower.
• Whether the property still suits your needs if its value remains below the contract price for a period.

If you are buying a home to live in for the long term, a short-term market decline may not automatically make the purchase unsuitable. But affordability and valuation risk still need to be considered.

6. Should you continue with the purchase or look for a way out?

There is no universal answer. Continuing may still make sense if the property suits your needs, you can comfortably afford it and you have enough funds to manage a possible valuation shortfall.

If your financial position has deteriorated or you are concerned that settlement may not be achievable, seek professional advice early. Your next steps may involve legal advice, a review of lending options and discussions with the builder or developer.

Final thoughts

If you signed a contract for a house and land package and are now seeing similar properties advertised for less, it is understandable to be concerned.

You cannot change the price you originally agreed to, but you can still take practical steps. Compare properties carefully, review the contract with your conveyancer, speak with the builder about any flexibility and review your finances with your mortgage broker.

Do not assume property prices will recover before settlement, and do not wait until settlement is approaching to check whether your finance still works.

The earlier you identify a potential issue, the more time you have to understand your options and prepare your next move.