At a time when young families across the country are paying an average of $900,000-plus for a pre-loved home, Mirvac is supporting Baby Boomers to buy a new land lease home for an average of $580,000.
This is fascinating in concept. Why aren’t developers and young people thinking of land lease for younger people? The answer is most likely for two reasons.
The first is that banks aren’t typically lending for land lease homes, and the second, young customers have fixed in their mind either a new project home, a pre-loved home or an apartment. And they are missing out by not accepting medium to high density, which past generations did accept.
They are not thinking about starting small like the Baby Boomers did, like the 1970s and 1980s high-density townhouses, or the popular terraces, like in Paddington (Sydney) or Albert Park (Melbourne), which by the way, don’t have parking.
Is it time for young couples to accept that close community medium density is an acceptable form of housing?
Perhaps Mirvac and Stockland will be the channel to this market, given they are slicing off sections of their greenfield developments for Over 50s land lease. For instance, Mirvac has sliced off 200 lots off its Everleigh, Brisbane greenfield.
Will young greenfield buyers look over the fence and say ‘I would prefer to spend $580,000 rather than the $750,000 for the greenfield home’? It will be a smaller home but the buyers won’t be paying the quoted $290K for the land and 35%+ of the combined (couple) income on a big mortgage.
As many early buyers of land lease know, you can also make a good short term profit as prices escalate as the community and community facilities build out and prices rise.
We expect that Simon Owen at Eureka will be thinking this way, as will Adrian Puljich at GemLife and John Wood at Providence in WA. What about others?
