Buying off-the-plan: Risks and Benefits Explained

Purchasing an off-the-plan home – whether it be an off-the-plan apartment, townhouse or house and land package – is a fantastic way to secure a stylish, functional and spacious home for your family, often for much less than your preferred suburb’s median house price.
 

What does buying property off-the-plan mean?
 

Understanding exactly what buying an off-the-plan property means is the first step in making an informed decision as to whether or not this increasingly popular option is right for you. Whether you’re a first home buyer, looking to upsize, or think it’s time to move out of your detached family home and downsize, there is an affordable off-the-plan option out there for you. 
 

What is the normal process for buying an apartment or house off-the-plan?

The process begins when you inspect the display suite for the development – private appointments and virtual appointments are also widely available now. Click here to find a plethora of off-the-plan apartments and townhouses that you can virtually inspect.

Buying off-the-plan means purchasing a property before it has been completed – by viewing the plans, i.e – the floorplan, renders and key details about the development and your individual property. You agree to purchase the property with guarantees pertaining to quality, style, timeframe of construction and completion date, size, decor and functionality – and these guarantees are written into your contract of sale. 
 

How does buying off-the-plan differ from other ways of purchasing property?

Buying off-the-plan means that you will be purchasing a brand-new home that nobody has ever lived in before. You can often select your ideal floorplan and have input when it comes to your preferred colour-scheme and ideal finishings and fixtures – a true blank canvas.  

Getting together enough money to afford an established home in sought-after areas is becoming increasingly difficult for Australians in the current housing market. The median price of an off-the-plan apartment, townhouse or house and land package is often significantly lower than pre-existing houses, meaning there are many financial differences to buying off-the-plan.

In addition to lower prices, buying off-the-plan allows purchasers to put down a reduced deposit – sometimes as low as 5 percent – and have the entire build-time to secure the rest of the cost. This is perfect within the current climate, as buyers can enter a contract of sale and secure a home, and not have to put down a substantial amount of money until the economy is in a more stable position. 
 

Why do developers sell off-the-plan?

In order to attract as many pre-construction sales as possible, developers sell off-the-plan. This way they can secure the necessary finance from their lender in order to complete the build. 

The contact of sales will always outline the obligations of the developer once you have handed over your deposit, including a timeline for completion and style and quality standards that must be adhered to. The contract of sale will also include a cooling-off period for increased peace-of-mind.  

The lifestyle pros and cons of buying off-the-plan

Buying off-the-plan often means you can secure a stylish and high-quality home with the most up-to-date design and functionality standards. 

Many developments also boast a plethora of resident amenity, such as gyms, pools, spas, on-site retail and dining, and more – which enhance your lifestyle and provide increased convenience. 
 

What are the pros when it comes to your lifestyle when you buy off-the-plan?

Purchasing an off-the-plan home gives you the opportunity to inject your own personal style into a modern, contemporary space that can often be purchased for much less than the median house price for a comparable property in the area, and also means you can often make a more sustainable choice. 

Forward thinking developers are creating collections of residential dwellings with a key focus on thoughtfully selected materials and impressively high energy ratings, giving owners a unique chance to seamlessly integrate sustainable practices into their everyday lives simply by enjoying their home.

Buying an off-the-plan townhouse does not have to mean conforming to a uniform aesthetic. With flexible floor-plan options and customisable interiors becoming increasingly available, an off-the-plan apartment purchase now provides you with more scope for creativity than ever. 

The contemporary, chic design of many new residential developments across Melbourne offers the ideal blank canvas for you to set to work injecting your own personal style into your home, and well-designed townhouses are showcasing an increasingly intelligent and thoughtful use of space.

Buying off the plan often means you’re saving money, meaning you have more in your pocket to enjoy life. With interest rates as low as they currently are, this could be the ideal time to purchase off-the-plan. 
 

How do you avoid the lifestyle pitfalls when you buy off-the-plan?

One of the most important factors to consider when purchasing off-the-plan is location. You will experience a vastly different lifestyle if you are to purchase an off-the-plan apartment or townhouse in or close to the city centre, than if you are to purchase a townhouse or house and land package in a lower density area outside of the city.

If you’re looking for a quieter lifestyle to downsize to or raise a family, there are a number of medium and low density off-the-plan options available which can give you the lifestyle you desire. 

If you crave the bustle of city life, townhouse and apartment developments in the CBD of inner-suburbs are the perfect option – particularly as many are located within walking distance of public transport, local eateries and shopping destinations.

The financial pros and cons of buying off-the-plan

What are the financial pros when it comes to buying off the plan?

The median price of an off-the-plan apartment, townhouse or house and land package is often significantly lower than pre-existing houses, meaning there are many financial benefits to buying off-the-plan. 

If you're looking to purchase real estate as an investment, or are hoping to owner-occupy, there are a range of off-the-plan options that can help you beat this housing affordability dilemma.

A key benefit of buying off-the-plan is the value. You can purchase a home in a city’s most highly sought-after suburbs, close to public transport and the best amenity. 

Buying off-the-plan also means you can take advantage of duty-concessions, potentially saving you thousands of dollars on stamp duty. 

Many developers allow you to secure a home with a lower deposit, making an off-the-plan townhouse an achievable opportunity. There are also significant tax depreciation deductions available if you purchased an off-the-plan as an investment, creating further financial incentive.
 

How can you avoid the financial pitfalls when buying off the plan?

Understanding your contract of sale is vital when it comes to avoiding pitfalls in an off-the-plan purchase. There are now a number of 

Being on top of your state’s grants, loans and incentives is also important, so you remain aware of exactly what you’re entitled to. Many state and territory governments offer first home buyer incentives and stamp duty concessions, making purchasing off-the-plan a great option. 

Thanks to recent law reforms including changes to the Sunset Clause that protect buyers, purchasers can enter into an off-the-plan contract of sale across Australia with increased confidence. Developers are beholden to strict regulations and standards in quality, timely completion of work and transparency with purchasers, meaning you will know exactly what you’re signing and buying, with regular updates along the way. 

Downsizers and older investors can also enter a off-the-plan contract of sale with improved confidence thanks to these improved buyer protections. 

Property market reports are a great resource to utilise when considering if purchasing an off-the-plan home is right for you. 

For more market insights, click here.