Property: Wait or Buy off-The-Plan

Lblaque on 05/02/2024 - 09:32
Last edited 05/02/2024 - 10:11 by 1 other user

Hey everyone, quick question for you all, nothing too serious though.

I'm torn between waiting to buy a place in my dream location or jumping on an off-the-plan deal in a less desirable area for a lot less money.

Background: I'm currently in an apartment but looking to move up to a townhouse / upsize. Pretty happy with where I am right now but the space is a bit limited.

With the cost of living skyrocketing, saving up for a property in a prime spot like (South) East Melbourne is looking like a long road. Meanwhile, the west side of Melbourne is booming with development, offering tons of off-the-plan options with tempting perks like a low 10% deposit and the rest payable in two years.

Thoughts?

Financial

Comments

  • Duckie2hh on 05/02/2024 - 09:36

    PPOR or IP?

    • blaque on 05/02/2024 - 09:37

      PPOR. The apartment will be IP, that's the plan

      • Duckie2hh on 05/02/2024 - 10:03
        +1

        With the IP, buy existing unit/flat. Something built before 1990's. Aim for a flat/unit that is more than 2 story, with less than 20 units in a block.

        Buying off the plan for an IP will not be ideal for most investors.

        • rumblytangara on 05/02/2024 - 13:37

          Why more than 2 floors?

          • Hansi on 05/02/2024 - 13:55
            +2

            @rumblytangara: I believe they meant to say no more than two stories aka no high-rises for example due to potential additional maintenance/cost (lifts etc.)

          • Duckie2hh on 05/02/2024 - 14:08

            @rumblytangara: Sorry correction to " no more than 2 floors"

            • rumblytangara on 05/02/2024 - 14:15
              +1

              @Duckie2hh: Ah makes sense. Because I agreed with the other points, the "must be a tall building" thing confused me :)

        • Ashless on 06/02/2024 - 17:59

          If looking to maximise your tax deductions, new properties would give you a larger depreciation claim vs older properties.

          • Duckie2hh on 07/02/2024 - 09:27

            @Ashless: Yes but new properties often come with issues, not to mention that they are also often in greenfield areas where supply are plentiful (therefore reducing potential capital gain over time).

  • dtc on 05/02/2024 - 09:41

    Everyone will tell about the risks of buying off the plan, and there are many. However they can also be a reasonably good deal; albeit that a better (or, at least, less risky) deal is to buy an already completed house in the off the plan areas - it shouldnt be any more expensive, although perhaps less availability. But pay attention to the financing - paying the balance in 2 years just means they up the price now to compensate for not receiving the money for 2 years.

    On the other hand, if housing continues the way it has been then getting into the market earlier will be better. Pretty much everyone starts on a home that isnt their ultimate home, you build up to it (no pun intended) and thats just the way it is.

  • bemybubble on 05/02/2024 - 09:46
    +2

    Never assume what you want will be ready when you are.

    So with that in mind - find your dream home - if you find after a while you can't afford/get anything - then adjust your thinking accordingly

    • blaque on 05/02/2024 - 10:00

      good advice! Thanks for that

  • jjjaar on 05/02/2024 - 09:48

    With off the plan, when are they saying you’ll move in? Add at least 6-12 months to that.

    In that time, do you think you’ll have the funds to secure a home in a location you prefer?

    • blaque on 05/02/2024 - 10:01

      I'm pretty sure we can get the funds together, but then again, 2-3 years is a long stretch, and who knows what could happen? Prices might shoot up even more during that time.

  • MrThing on 05/02/2024 - 09:52
    +3

    off the plan……dont you read the news?

    • blaque on 05/02/2024 - 09:55

      builders filing for bankruptcy left/right/center?

      • MrThing on 05/02/2024 - 09:57
        +8

        I was more commenting on the poor quality of off the plan buildings and how difficult it is to get them rectified

        my references are specifically NSW based from news articles and reports from the NSW building commissioner

        Melbourne however seems even more wildwest when you look at the quality of the Victorian VBA

        Bankruptcy by the builder/developer would be lower on my list of concerns with off the plan as I wouldn't buy into building by a developer/builder who this is their first rodeo

      • bmxr on 05/02/2024 - 11:59
        +4

        There are other issues too;

        • developer selling it to you off the plan
        • taking your deposit
        • building the townhouse
        • nearing completion, realising property values had increased and it's worth more than you had agreed to in your contract
        • letting the contract lapse and handing you your deposit back without interest many years later (having used it to help build the development)
        • and then selling it to the market once completed
        • FezMonkey on 07/02/2024 - 10:10
          +1

          I'm pretty sure there were laws passed in the last few years that prohibit this.
          OP will be able to read that clause on the contract anyway and see if they think there is enough leeway to accommodate normal delays.

  • CyberMurning on 05/02/2024 - 10:46
    +2

    no apartment
    no off the plan

    • blaque on 05/02/2024 - 11:18

      Well, the apartment we already bought (mortgage). I mean…if money is not an issue then yeah, no off the plan.

    • donbot on 05/02/2024 - 12:19

      you forgot the no owners corp, but otherwise spot on.

  • ForkSnorter on 05/02/2024 - 10:57

    Wouldn't the shift from 2% to 5-6% interest rates for many people this year result in more properties on the market and potential lower prices?

    • blaque on 05/02/2024 - 11:19

      I wish…more properties were being passed on from the auction every week that's for sure whether the price is lower is another story

  • Porker on 05/02/2024 - 11:02

    As they say - "…Your dream house comes once a month…"

  • try2bhelpful on 05/02/2024 - 11:06

    There are a lot of apartments being built in places like South Melbourne, Collingwood, Fitzroy etc. Maybe look at places in smaller blocks with a bit more floor space. Anything “freestanding” is getting pricey. I would, certainly, look for existing as they do come onto the market reasonably regularly.

  • LanceVance on 05/02/2024 - 11:07

    If you're going to get off the plan then at the very least hire your own independent building assessor. That said assuming there are issues (seems likely) then it isn't necessarily easy to get them resolved, but you have something to lean on.
    However if your builder goes belly up then you're up shit creek.
    At this stage off the plan seems a bit too risky, but thats just me.

  • urahara on 05/02/2024 - 11:25

    Buy an existing house in decent condition. Spend money to rennovate it later.

  • JimB on 05/02/2024 - 11:32
    +1

    Sell the apartment and buy an older place in your dream location.

    In future, you can always renovate or KDRB an the house and live in your dream house in your dream location.

  • Cherry12 on 05/02/2024 - 12:24

    I would buy in West Melbourne now, a house but not off the plan, an already built house.

    There are too many risks with buying a house off the plan and usually the land is smaller. I would sell the apartment if I needed money to complete the deposit.

  • KaTst3R on 05/02/2024 - 12:25
    +1

    Off the plan these days look so risky. It could be quality issues or builders going bust or builders trying to utilise the sunset clause to f**k you over. So many things can go wrong with off the plan. I would totally reconsider this approach.

  • clover on 05/02/2024 - 23:59
    +2

    Maybe take a look at site inspection youtube channel to get an idea how the quality of new builds nowadays. You might never want to touch any new builds again.

    • BeamMeUp on 06/02/2024 - 10:02
      +1

      He is on FB as well.
      😳 would not get anything built or buy of the plan nowadays.

  • tabitha731 on 06/02/2024 - 08:27

    NEVER BUY in “booming” areas.. infrastructure will take years to make living out in the stix worthwhile. Buy an established home in your dream area, and your investment will grow faster

  • Wazzawiseone on 06/02/2024 - 08:52

    Off the plan. Absolutely NO.
    West Melbourne?. Check out these as you should be able to get a bargain. May not ever be able to live in it but its in West Melbourne.

    https://youtu.be/eoN8S6wxfe4

  • FezMonkey on 07/02/2024 - 10:11

    10% deposit and 90% at settlement is normal for off-the-plan dwellings.
    Since the market is still slow most likely they'll accept 5% deposit (so 95% at settlement) and probably throw in other settlement rebates too.

    • blaque on 07/02/2024 - 11:17

      Yeah, that's the selling point IMO. At least for us

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