The effect of layer-by-layer heterostructuring and epitaxial strain on lattice instabilities and related ferroelectric properties is investigated from first principles for the [001]-(PbTiO\(_3\))\(_1\)(PbZrO\(_3\))\(_1\) superlattice and pure PbTiO\(_3\) on a cubic substrate. The results for the superlattice show an enhancement of the stability of the monoclinic r-phase with respect to pure PbTiO\(_3\). Analysis of the lattice instabilities of the relaxed centrosymmetric reference structure computed within density functional perturbation theory suggests that this results from the presence of two unstable zone-center modes, one confined in the PbTiO\(_3\) layer and one in the PbZrO\(_3\) layer, which produce in-plane and normal components of the polarization, respectively. The zero-temperature dielectric response is computed and shown to be enhanced not only near the phase boundaries, but throughout the r-phase. Analysis of the analogous calculation for pure PbTiO\(_3\) is consistent with this interpretation, and suggests useful approaches to engineering the dielectric properties of artificially structured perovskite oxides.