In today’s market, buying off the plan has become very common, but is it really something that is right for you?

It is a term which can be confusing to many and here you can find some answers.
To begin with, off the plan properties usually refer to those properties which are in the plan phase and yet to be constructed. It implies that the properties have been planned to be built, a design has been approved and it will be available to the purchasers in the future.

Buying off-the-plan can be a confident move particularly if the property market is on the rise, as it is now. You only need to put down a deposit to secure “today’s price’’, it doesn’t matter if the market value has jumped by settlement time, you don’t have to pay more. You have more time to save (particularly if construction hasn’t started yet) so you won’t need to borrow as much and you have longer to shop around for the mortgage that suits you best.
It can be more affordable. If you buy very early in the process developers are often keen to secure sales for the project to go ahead.

In addition, there are other benefits. The purchasers can instruct the developer to make changes to the property according to their specifications. In Australia, buyers can also benefit from the government’s concession and exemption on stamp duty in some states. Furthermore, if the buyer is buying off the plan and it is a first home buyer, some of the states in Australia provide a ‘first home buyer grant’ (this can vary in each state).

Many off the plan property buyers are investors, who invest in these properties for capital gains. It is assumed that a property appreciates in time and some investors like to benefit from this concept. Though this theory is commonly known, it depends on several factors which include, location of the property, economic growth, government policies, demand and supply, etc.

As there are two sides of a coin, buying off the plan also has certain risks attached. If you are an investor and looking for capital gains, defining the number of years for the right profit is difficult. Other risks are: the price of the property might not rise or may fall in the future. The builder might not comply with the promises they made and the outcome might not be as spectacular as you thought. Additionally, there are some factors, which cannot be predicted beforehand and come to light after a person faces them. For example, quality of construction, your situation could change and you are still financially obliged to settle. What if you lose your job, have a child, marry or divorce, will that change your needs?, etc.

When buying off the plan, always remember to do some research in advance to ensure that your money has been put in the right place. To make sure your investment will appreciate in the future and bring positive results try to do it right.

Contact the team of experts at Fundamental Property Investment to get answers to your questions. We think long term, do you?