First home buyers have returned to the market and their share of the market has increased to 29.2 per cent (see our property report for more details). Most of the new market entrants have purchased new or off-the-plan properties.
What is an off-the-plan property?
An off-the-plan property represents a dwelling that is yet to be built; this could be a house, apartment, townhouse or other type of property. Buying an off-the-plan property allows the owner to review the developer’s plans, get their thoughts on the design and make adjustments based on their needs.
Buyers of off-the-plan properties will typically pay an initial 10% deposit, with the remaining amount due after the home is complete. Construction times can vary depending on the number of properties in the development and other factors.
What are the benefits of buying new or off-the-plan properties?
First home owner grants and stamp duty savings are the initial enticing facts for buying an off-the-plan property.
Five things that all investors/home owners should consider:
1. Review the design
New or off-plan-properties allow the buyer to view the design before committing to the purchase, typically meaning these houses will be tailored to more contemporary styles that are consistent with market trends. The architectural design of the home will feature cutting-edge designs which maximise natural light, space and minimise environmental impact.
2. Consider the amenities in the development (apartments)
Amenities have become increasingly important in new developments. For example, many apartment buildings now include add gyms, pools and recreational spaces.
What to consider: Get a good understanding of the amenities your apartment building is going to be offering, as the quality of amenities can greatly affect the price. Most potential buyers will consider this as it influences the appeal of the apartment complex.
3. How hard will it be to attract tenants?
If you’re purchasing an investment property, you’ll need to consider the attractiveness of the property for potential tenants.
What to consider: Understand which designs, facilities, locations, proximity to public transport and working hubs will help you attract great tenants and ensure that there will be consistent interest in the apartment.
4. What are the financial trade-offs?
Understand the financial trade-offs of buying a property. Some common questions to think about are:
· What are the repayments?
· How long are you anticipating it will take to pay off the mortgage?
· Are you expecting rental income to offset the mortgage repayments?
· What is the average time it takes to get a tenant?
What to consider: The financial benefits of owning a new home must be considered against the loan size and monthly repayments. There are many things investor can leverage to make the trade-off more beneficial, such as depreciation.
5. What the expected costs for maintenance and repairs?
Newly built homes are expected to meet high standards of building regulation, hence buyers can be confident that safety standards have been adhered to. Given the high standards, the required level of maintenance and repairs will be less than that of an older property, especially in the first 5 years. This benefits you as an investor, as you’ll have less to worry about and potentially save thousands in maintenance costs.
What to consider: New properties are likely to be rent-ready with investors spending less on maintenance and repair costs.
Still have questions?
If you have any questions on purchasing an off-the-plan property, don't hesitate to contact us for a FREE consultation. We understand this is a lengthy and confusing process and our team will be happy to answer any questions.