---
title: "Three Property Decisions That Cost Immigrants a Decade of Earnings. I Have Seen It Hundreds of Times."
description: "Apartments, house-and-land packages, and amateur developments are destroying immigrant wealth in Australia. Real examples: $80K opportunity cost per year on apartments, $40K loss on a Glen Waverley development gone wrong."
author: Joey Don
date: 2022-06-09
category: Scam / Warning
url: https://premiumrea.com.au/blog/three-property-mistakes-costing-immigrants-decades-of-wealth
tags: ["property mistakes", "immigrants", "apartments", "house and land package", "property development", "wealth destruction", "financial literacy"]
---

# Three Property Decisions That Cost Immigrants a Decade of Earnings. I Have Seen It Hundreds of Times.

*By Joey Don, Co-Founder & CEO at PremiumRea — 2022-06-09*

> I have had over a hundred consultations where the pattern is identical. Smart, hardworking people who aced their migration journey and then made one catastrophic property decision that wiped out a decade of savings. Here are the three worst offenders.

A lot of people make poor financial decisions. But there is a specific pattern I see among skilled migrants in Australia that genuinely upsets me. These are people who moved across the world, spent tens of thousands on education and visa fees — often using family savings — and then, after all that effort, make one of three property mistakes that effectively sentence them to another decade of working just to break even.

I am Joey. I only speak truth and I only do what works. And today I am going to walk you through the three dumbest property decisions I see on repeat, because I sincerely want our community to build wealth in this country rather than donate it to developers, agents, and the ATO.

In over a hundred consultations, the pattern has been almost identical every single time. Diligent people who are meticulous about small things — staying late at work, studying for certifications on weekends, helping colleagues for free — but who make catastrophic errors on the big decisions. Brilliant at earning money. Terrible at deploying it.

Let me be honest about why this topic matters to me personally. I am part of this community. I have watched friends and family members make exactly these mistakes, sometimes despite my explicit warnings. The emotional pull of "owning something in Australia" overrides rational analysis every single time.

And the financial consequences are not abstract. They are measured in years of additional working life. Decisions made in a weekend — often under pressure from a sales agent — determine whether someone retires at fifty-five or works until seventy. That is not hyperbole. That is arithmetic, as I will demonstrate.

## Mistake one: buying an apartment as your home

There are exactly two situations where buying an apartment is defensible. First, you are so wealthy that the purchase price is pocket money. Second, you are a single woman who feels genuinely unsafe living alone in a house. Those are legitimate reasons.

Everyone else? You are lighting money on fire.

I have run the numbers publicly and I will run them again here. A house purchased for $700,000 today will, based on Melbourne's long-run average, be worth approximately $1,400,000 in ten years. A doubling. That is what established houses on land have done across virtually every major Australian market over rolling decade-long periods [1].

An apartment purchased for $700,000 today? In ten years, it will be worth roughly $700,000. Maybe $720,000 if you are lucky. Apartment values in most Australian cities have been flat to negative in real terms for over a decade. The reasons are structural: apartments depreciate as buildings age, body corporate levies consume capital, and developers continually add competing new stock [2].

But it gets worse. New apartments carry body corporate fees of approximately $10,000 per year. Over ten years, that is $100,000 in pure holding cost that a house owner does not pay.

So the real comparison after ten years:
- House: $1,400,000 in value, zero body corporate paid. Net position: $1,400,000.
- Apartment: $700,000 in value, $100,000 in body corporate paid. Net position: $600,000.

The gap is $800,000. Over ten years, that is $80,000 per year in opportunity cost. And $80,000 happens to be roughly one full-time pre-tax salary [3].

One decision. Made in a weekend. Costs you ten years of your working life. That is not an exaggeration. That is arithmetic.

Let me break the apartment comparison down even further, because I want the numbers to be absolutely irrefutable.

The house scenario: $700,000 purchase with a 20 per cent deposit ($140,000). Mortgage: $560,000 at 6 per cent interest-only, costing $33,600 per year. Ten years of interest: $336,000. Property value after ten years: $1,400,000. Net position: $1,400,000 minus $560,000 mortgage minus $336,000 interest = $504,000 in equity and accumulated savings.

The apartment scenario: $700,000 purchase with a 20 per cent deposit ($140,000). Mortgage: $560,000 at 6 per cent interest-only, costing $33,600 per year. Body corporate: $10,000 per year. Ten years of interest: $336,000. Ten years of body corporate: $100,000. Property value after ten years: $700,000. Net position: $700,000 minus $560,000 mortgage minus $336,000 interest minus $100,000 body corporate = negative $296,000.

Read that again. After ten years, the house buyer has $504,000 in positive equity. The apartment buyer is $296,000 in the negative when you account for all costs paid. The total gap is $800,000.

And I have not even factored in that the house could have been rented during those ten years for approximately $600 per week — $312,000 in total rental income — while the apartment might have achieved $400 per week, or $208,000. That is another $104,000 gap.

Every single one of these numbers is verifiable. Every single one uses conservative assumptions. The actual gap is probably larger.

## Mistake two: house-and-land packages for 'investment'

This one is even more frustrating because the people doing it genuinely think they are being clever.

House-and-land packages in new development estates are marketed aggressively to investors with three selling points: brand new (no maintenance), turn-key (no hassle), and negative gearing (tax benefits). They sound compelling until you look at what you are actually buying.

You are buying a depreciating building on a tiny lot in a suburb with unlimited competing supply. The land component — the only part that appreciates — might be 200 to 300 square metres. The house itself starts losing value the moment it is built. And the development estate keeps releasing more identical lots, ensuring that supply never tightens enough for meaningful price growth [4].

I have seen clients wait two years for a house-and-land package to be built, only to discover on completion that comparable finished houses in the same estate are selling for less than they contracted. They are underwater before they even move in.

One client — a real person, not a hypothetical — contracted in 2017 and their house was still not built two years later. When I asked if they had reconsidered, they insisted they could assign the contract and make money. They could not articulate how, but the conviction was rock solid. That is the power of sunk cost fallacy meeting a slick sales process [5].

Meanwhile, the developers and their sales agents are driving Porsches. Where do you think the margin comes from?

Let me explain why house-and-land packages are structurally designed to benefit the developer, not the buyer.

A typical house-and-land package in a growth corridor might be advertised at $650,000. Of that, $250,000 is land and $400,000 is construction. The land — 300 square metres in a development estate — might be worth $250,000. But the house being built on it costs the developer perhaps $250,000 to construct. The remaining $150,000 is profit, sales commission, and marketing costs.

You are paying a 60 per cent markup on the construction component. That markup is not value that accrues to you. It is profit that accrues to the developer. From day one, your property is worth approximately $500,000 on the open market — the $250,000 land plus $250,000 replacement cost of the house. You have paid $650,000. You are $150,000 underwater before you even pick up the keys.

Compare this to buying an existing house for $650,000 on 600 square metres of land. The land component might be $520,000 (80 per cent). The building component is $130,000. The building is older, yes, but the land — which is the only part that appreciates — is worth more than double the land in the development estate. And there is no developer markup.

Five years later, the existing house on 600 square metres has land worth $650,000 (25 per cent growth on land component). Total property value: approximately $780,000. The house-and-land package has land worth $312,500 (25 per cent growth on $250,000 land component). But the building has depreciated. Total property value: approximately $530,000.

The gap after five years: $250,000. And it widens every year because the larger land holding compounds at a higher base.

## Mistake three: amateur property development without understanding GST

This is the most expensive mistake, and the one that breaks my heart the most because it usually wipes out a family's entire savings.

Property development — buying a block, subdividing, building two townhouses, selling for profit — is a legitimate wealth-creation strategy. When done by professionals with experience, proper tax structuring, and realistic cost models. When done by amateurs who do not know what a GST margin scheme is, it is a wealth-destruction machine.

Here is a real case. A family in the eastern suburbs bought a block for $1,000,000. They spent $1,500,000 building two premium townhouses — one at the front, one at the rear. Both properties went to auction. Both failed to sell. They eventually accepted $1,250,000 each — $2,500,000 total [6].

Sounds like they broke even, right? Purchase $1,000,000, build $1,500,000, total cost $2,500,000, total sales $2,500,000. Zero profit, zero loss.

Except no. Two years of holding costs — interest on the construction loan at roughly $15,000 per month — cost them $300,000 in interest alone. Stamp duty on the original purchase cost another $50,000. And because they did not structure the development correctly for GST purposes, the ATO assessed them for $100,000 in GST on the sale.

Total actual loss: approximately $400,000. An entire decade of household savings, gone. And this family, like most amateur developers I encounter, had no idea about the GST margin scheme before they started [7].

There are people who make millions from property development. They have done it dozens of times. They have quantity surveyors, tax accountants, and construction managers on speed dial. They know exactly what a margin scheme is and when to use it.

If you do not know what those words mean, you are not ready to develop. You are ready to get educated first.

The GST issue deserves more attention because it is truly the silent killer of amateur development projects.

When you build and sell a new residential property in Australia, you are conducting an enterprise for GST purposes. The sale price includes a GST component. On a $1,250,000 sale, the GST (at 10 per cent) is approximately $113,636 (calculated as 1/11th of the total price).

The margin scheme allows you to pay GST only on the margin — the difference between the sale price and the original purchase price of the land. If you bought land for $1,000,000 and sold the developed property for $1,250,000, the margin is $250,000 and the GST is approximately $22,727 (1/11th of $250,000). That saves you roughly $90,000.

But to use the margin scheme, you must have purchased the property from someone who was not registered for GST (typically a private individual selling their home), and you must elect to use the margin scheme before the sale. If you purchase from a developer, a trust, or a company, the margin scheme may not be available.

The family I described earlier did not know any of this. They purchased from a developer (margin scheme unavailable), did not seek GST advice before commencing, and were assessed for the full GST amount on sale. That $100,000 tax bill was entirely avoidable with proper structuring.

This is not an edge case. In my experience, more than half of amateur developers I encounter have either not considered GST at all or have received incorrect advice about it. The ATO is aggressive about auditing new residential sales. If you do not have your GST ducks in a row before settlement, you are playing Russian roulette with a $100,000 bullet.

## Why smart people make these mistakes

The pattern is always the same. People who are disciplined and careful in their professional lives somehow abandon all critical thinking when it comes to property decisions.

Part of it is the immigrant experience. After years of effort to establish yourself in a new country, there is an understandable desire to "arrive" — to own something tangible that signals success. An apartment in a shiny tower feels like arrival. A house-and-land package with a double garage feels like the Australian dream. A development project feels like becoming a mogul [8].

Part of it is information asymmetry. Property developers, project marketers, and their commission-based sales agents have enormous budgets and sophisticated techniques. They host seminars. They produce glossy brochures. They offer financing assistance. The entire funnel is designed to make saying yes feel easy and safe.

And part of it is simply that property is sold, not bought. The average buyer does not go searching for the optimal investment. They respond to marketing. They buy what is put in front of them. And what is put in front of them is almost always the thing that generates the fattest margin for the seller.

The antidote is boring: learn to read a Section 32. Understand the difference between land value and building value. Know what a General Residential Zone allows versus a Neighbourhood Residential Zone. Calculate gross yield and net yield before you calculate how the kitchen will look [9].

Or — and I recognise the self-interest in saying this — engage a buyer's agent who is contractually obligated to act in your interest, not the vendor's. Across 350-plus transactions, our team's average purchase has appreciated 15.7 per cent annually. We have the data to prove it, and we publish it publicly [10][11][12].

I am not saying this to sell you my services. I am saying this because every dollar an immigrant wastes on a bad property decision is a dollar that could have compounded into genuine intergenerational wealth. And our community deserves better.

Let me add one more dimension to why immigrants specifically are vulnerable to these mistakes. It is not just information asymmetry. It is cultural context.

In many Asian property markets — China, Vietnam, Singapore, Hong Kong — apartments are the primary form of housing. High-rise residential towers dominate the urban landscape. The concept of a detached house on a quarter-acre block is culturally unfamiliar. So when a Chinese-Australian family is offered a modern, high-rise apartment in a Melbourne tower, it feels normal. It maps to their existing mental model of "good housing."

What they do not realise is that the Australian property market operates on fundamentally different economic principles. In land-constrained Asian cities, apartments appreciate because land is genuinely scarce and population density is extreme. In Australian cities — where there are thousands of square kilometres of developable land — the scarcity premium sits with established houses on large blocks, not with apartments that can be replicated indefinitely by constructing another tower.

This cultural blind spot is actively exploited by property marketers who specifically target immigrant communities with apartment projects. They advertise in community newspapers, sponsor community events, and employ bilingual sales agents. The entire marketing apparatus is designed to make the purchase feel culturally familiar while the economics are structurally unfavourable.

I am not accusing these marketers of malice. They are pursuing profit, which is their right. But the information gap they exploit produces real human costs — families trapped in depreciating assets, unable to build the intergenerational wealth that property should provide.

Our 350-plus transaction portfolio is built entirely on the opposite philosophy. Every single property is a house on land. Every single property has a land-to-total-value ratio of at least 80 per cent. The average annual appreciation across the portfolio is 15.7 per cent. That is the difference between buying what the market sells you and buying what the data tells you.

## References

1. [CoreLogic, 'Hedonic Home Value Index', February 2020. Melbourne established houses: median 10-year compound annual growth rate approximately 7.2%.](https://www.corelogic.com.au)
2. [Reserve Bank of Australia, 'Apartment Supply and Prices', RBA Bulletin, September 2019. Unit prices in high-supply corridors show flat to negative real growth over 5-10 year periods.](https://www.rba.gov.au)
3. [Australian Bureau of Statistics, 'Average Weekly Earnings', Cat. No. 6302.0, November 2019. Full-time adult average ordinary time earnings $1,658/week ($86,216 annualised).](https://www.abs.gov.au)
4. [Urban Development Institute of Australia, 'State of the Land 2020', UDIA Research. New lot supply in Melbourne growth corridors: 20,000+ lots per year.](https://www.udia.com.au)
5. [Consumer Affairs Victoria, 'Off-the-plan contracts', guidance for buyers of unbuilt residential property, updated January 2020.](https://www.consumer.vic.gov.au)
6. [PremiumRea advisory case study. Eastern suburbs development: $1M land, $1.5M build, $2.5M sales, net loss ~$400K after interest, stamp duty, and GST.](#)
7. [Australian Taxation Office, 'GST and the margin scheme', NAT 15145, updated December 2019. Margin scheme provisions for property developers.](https://www.ato.gov.au/business/gst/in-detail/your-industry/property/gst-and-the-margin-scheme/)
8. [Productivity Commission, 'Migrant Intake into Australia', Inquiry Report No. 77, April 2016. Skilled migrants: higher savings rates, lower financial literacy in local property markets.](https://www.pc.gov.au)
9. [Victorian Government, 'Understanding planning zones', DELWP Planning Practice Note 91, updated 2019.](https://www.planning.vic.gov.au)
10. [PremiumRea portfolio data. 350+ transactions, average annual capital appreciation 15.7%, average weekly rent $709.](#)
11. [REIV, 'Melbourne Quarterly Median Prices', Q4 2019. Established house medians by municipality.](https://www.reiv.com.au)
12. [Grattan Institute, 'Generation Gap: ensuring a fair go for younger Australians', November 2019.](https://grattan.edu.au)

---

Source: https://premiumrea.com.au/blog/three-property-mistakes-costing-immigrants-decades-of-wealth
Publisher: PremiumRea (Optima Real Estate) — Melbourne buyers agent