What you need to know when considering a new build apartment.
Thinking of buying off the plan? Look beyond the marketing campaigns to consider the real pros and cons of an off the plan property.
There are plenty of arguments in favour of buying off the plan, whether you’re looking for your first property or planning to downsize. But along with the convenience and control comes a degree of risk. Here are the pros and cons to consider when buying off the plan.
Positives of buying off the plan
There are some real positives for Sydney buyers looking at off the plan apartments, with location top of the list. Buyers willing to compromise on size are often able to buy into the suburb they really want, dramatically reducing their commute. New apartment complexes are currently transforming Sydney’s CBD, but even in more family friendly areas like Randwick, North Sydney and the inner west we’re seeing plenty of new build activity.
Control is another big advantage for off the plan buyers. Often you’ll have a direct say in your apartment’s fittings, colour scheme, and be able to choose from a range of floor plans. You may also have more control when it comes to financing as many developers only require a deposit to hold your property until the build is complete.
Price is usually the other deciding factor for buyers considering off the plan properties, as developers tend to set their prices slightly below the local market average. The right price will be particularly compelling if you’re a first home buyer aiming to gain a foothold on Sydney’s highly competitive property ladder.
The downsides: Is off the plan worth the risk?
As with any property decision, it’s not all upside when it comes to buying off the plan. Some of the biggest risks for buyers include:
Depreciation: While your property may increase in value over time, external market factors such as oversupply can leave you with a property that’s less valuable than when you bought it. Research your market and get expert advice before you buy to guard against this.
Delays: Even the most organised developers will face delays on a new build. The question is whether this delay only amounts to a few weeks or months, or balloons into a number of years before you can actually move in. Check your contract for the ‘sunset clause’ to find out exactly how long your developer has before they’re legally bound to complete the build.
Not what you paid for: The biggest risk for buyers is ending up owning an apartment that has defects or doesn’t match up to the image the developers promised. It’s important to protect yourself by researching your developer and looking closely at your contract before you sign to make sure you’re protected if something does go wrong.
The alternatives to off the plan apartments
If the risks of buying off the plan seem too great, the good news is that there are still plenty of older apartments across Sydney’s east, lower north shore and the inner west to consider. There are character filled art deco apartments, or older, well-built, walk-up style blocks built between the 1960s-80s. There’s no trouble with oversupply, and while they’re in smaller blocks, these apartments can be just as spacious or even bigger than their newer neighbours, with the added advantage that you can see (and touch) exactly what you’re buying.