Buying property off the plan

A boom in approved units, townhouses and apartments across the country could be seen as a good thing for Aussie home buyers, who may benefit from increased affordability and the option to purchase off the plan.

Australia has seen a year on year increase of 53.5% in the number of approved multi-density dwellings for development across the country (Australian Bureau of Statistics September 2015).

The boom in approved units, townhouses and apartments could be seen as a good thing for Aussie home buyers, who may benefit from increased affordability and the option to purchase off the plan.

What does buying off the plan mean?

Buying off the plan means exactly that – buying a property right off the plans, before it has even been built. You may have come across show rooms before – often located on or near the site of construction, decked out with mini versions of the building and shiny sales people ready and waiting with brochures.

While there can be benefits to buying off the plan, it’s also important to look at the considerations that come with purchasing property this way. We’ve put together some info on each to help you out.

Advantages to buying off the plan:

  • Buying off the plan can give you more time to save, which means you’ll have a bigger deposit to put down on your mortgage. This will directly affect the amount of interest you pay on your mortgage.
  • You may be able to have a say in how the property is finished - for example you could pick certain wall colours or bathroom fittings (check this with the development company first as this won't always be an option).
  • You may be eligible for a government grant (generally offered to first home buyers). These vary between states and territories so it’s important to find this out up front. Here's links to info on each state and territory:

ACT     NSW     NT     QLD      SA      TAS     VIC     WA

  • You may find you’ve got yourself a bargain if you purchase the property before it’s completed and the value of the property increases during construction.

What to consider when buying off the plan:

  • Touch and feel: you’ll need to consider the fact you can’t walk through a property that doesn’t exist yet. This means you can’t get a feel for the property in the same way you would by actually standing in it and exploring its features.
  • Timing: consider any implications of the construction being pushed out when it comes to timing – will you have already sold your existing property or ended your existing rental lease? You’ll need to have a backup plan in case the timing doesn’t line up as you’d hoped.
  • Value: as with the potential to nab a bargain, there’s also a possibility the value in the property will drop before the construction has ended, which means you will have paid more than what it’s worth. It might be a good idea to keep an eye on property trends and get to know the market before making a purchase decision.
  • Contract: it might be a good idea to get a solicitor on board to help with the contract. You might like to consider details such as ability to visit the construction site, your rights if construction is delayed and what happens if the construction doesn’t proceed.
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