Top considerations for buying off the plan
With large numbers of apartment blocks being built, there are plenty of opportunities to buy off the plan. We look at some of the pros and cons.
Apartment blocks are dominating the current construction boom, with multi-density dwellings making up a high proportion of new buildings being approved and built.
Approvals for multi-density dwellings were up 59.2%, seasonally adjusted, over the 12 months to March 2015, while approvals for houses were up just 1.6%, according to the Australian Bureau of Statistics.
This means there are lots of opportunities to buy off the plan, particularly when it comes to apartments, townhouses and duplexes.
What does it mean?
Buying off the plan means buying a property that has not yet been built. You can get a feel for the property through brochures and plans, and perhaps by visiting a demonstration property or show suite.
There are advantages to buying off the plan, but also considerations, so it’s important to do your homework before committing.
What are the advantages?
- By agreeing a sale price before the property is built you’re essentially buying tomorrow’s property at today’s prices. If property values rise during construction you may find you’ve got yourself a bargain.
- Buying off the plan can also give you more time to save. Not only do you have the construction period in which to put money aside, but some developers accept a deposit bond rather than a cash deposit, allowing you to buy now and pay later.
- You may be able to get a helping hand from your state government in the form of a First Home Owner Grant. These vary between states and territories and change over time so take the time to do your research.
- You may be able to apply a personal touch to your new home. With the property under construction, you may get a say in fixtures, fittings and other design features.
What are the considerations?
- You can’t walk through a property that doesn’t exist. You won’t get to see and touch what you’re buying until it’s completed.
- Plans may change during construction and the finished property may not be exactly as you imagined.
- If property values fall in the period between deposit and settlement, your property may be worth less than you pay for it. You can keep an eye on property market trends through our monthly market roundups.
- If you are also selling a home, you may need to time that sale so it fits in with settlement on your off-the-plan purchase. If construction is delayed you may not be able to move in when you hoped.
Do your homework
Research the area. If you want to see similar listings, sales and suburb data, our complimentary Property Reports can help.
Go through the contract with a solicitor before you sign. Things you might want to check include:
- Can you visit the construction site?
- What are your rights if construction is delayed?
- Is your deposit secure if building doesn’t proceed? Your state Office of Fair Trading or Consumer Affairs will have more advice.
Speak to one of our Home Lending Specialists about buying off the plan.