Buying off the plan

July 21, 2011 | Residential | Commercial

Buying off the plan is a popular choice for Canberrans with majority of developments selling prior to being built. Colliers International has seen this through the quality developments they’ve marketed such as the Realm developments in Barton, The Apartments in the City and recently the Bridge Point and Dockside developments in Kingston.

Boasting the lowest density of all capital cities in Australia, Canberra has provided developers great opportunities to redevelop prime sites and sell residential developments off the plan.

Over the past five years, Canberra’s employment hubs have seen local developers build low and high rise apartment projects achieving significant pre-sales prior to completion. The demand for off the plan property continues to rise while supply is not meeting the demand.

Derek Whitcombe, Director of Residential Project Marketing at Colliers International, said Canberra’s residential market has been strong over the past few years and has weathered the impact of the Global Financial Crisis.

As Canberra’s values rise and confidence in the market continues, Mr Whitcombe believes off the plan sales will continue to be popular, especially with investors, first home buyers and a large number empty-nesters.

“Colliers International has seen significant presales of apartment developments in Kingston, Barton and the City with many Canberrans reaping the benefits of buying off the plan”, he said.

Many people who have lived in the city for 30 to 40 years have watched their families grow up and move out of town. Their lifestyles have changed dramatically. Many of these people see apartment living as much more convenient and supportive of their increased travel and general lifestyle changes. They like to be close to restaurants, cafes and meeting places.

They find buying off the plan suits them ideally because it can give them up to two years to get their home into the best possible state to go to the market and enables them to utilise capital growth in the value of their home whilst waiting for the construction of their new apartment.

Younger people love buying off the plan because it gives them the extra time they need to save their deposit and money for soft furnishings and so on. Many of these are eligible for the Government’s first home buyers grant depending upon price range and other eligibility criteria.

Derek is a property expert specialising in selling residential projects off the plan. He has been involved in over 3500 apartment sales since the early 1980s. He explains the benefits of buying off the plan for live-in owners and investors.

Buying off the plan refers to purchasing residential property that has not been built. What you typically get is floor plans, elevations, a site plan and inclusions.

Buying Time
If you have a property to sell, buying off the plan will give you time to sell or refinance. It will also allow you to secure your new home or investment property with a nominal fee and exchange deposit, which means do not have to worry about paying for both properties.

Alternative Deposits
There are alterative deposits that can be used such as bank guarantees and deposit bonds.

Deposit bonds are similar to bank guarantees. They cover the 10 per cent deposit when exchanging contracts and provide the developer security that they will receive the equivalent exchange deposit sum if the purchaser does not complete the sale.

Money Matters
If you are buying the property with the intention of living in it, you do not require a mortgage until completion. If settlement is longer than 12 months, you might find that a revaluation at the current market price will allow you to borrow 100 per cent of the sale price.

In some cases, the purchaser will be able to escape paying mortgage insurance as well; due to the increased value of the property in relation to finance required to settle.

Investors: Stamp Duty is Tax Deductable in the ACT
One of the major benefits to investors when buying off the plan is that stamp duty is tax deductible in the ACT. This is not the case in all states of Australia, but there are definite financial advantages of buying investment property off the plan in the Canberra. Investors claim tax deductions and depreciation on buildings and fittings.   

Watch Your Capital Grow
Many investors buy off the plan with view to on-selling it prior to settlement. Long settlements allow for greater capital growth in the right market.

Substantial gains can be made when buying off the plan. For example: If a new home buyer purchases a three bedroom townhouse for $500,000 and the development takes 12 months from build to completion and the market increases by 10 per cent per annum, the value of the property will be $550,000.

Get in Early & Secure the Best
Whether purchasing as an investor or owner-occupier, buying off the plan gives you a greater opportunity to purchase your ideal location within the development.

Canberra’s astute investors typically secure their preferred apartment or townhouse as soon as they go on the market so they can purchase units that suit their investment needs, while owner-occupiers seek out the best views and configurations that meet their long-term needs.

By purchasing a property off the plan at the beginning of the sales campaign, the purchaser is able to choose the colour schemes, finishings and fittings that they favour from a selection provided by the developer, rather than be stuck with a colour scheme that doesn’t suit your personality or taste.

 

For further information please contact:
Andrea Kopatsy, Marketing Manager
Marketing & Research, Colliers International
Tel: 0423 298 461
Email: andrea.kopatsy@colliers.com
www.colliers.com.au

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