Maloney's Property, with 30 years of experience in the Canberra property market, will provide valuable insights into the pros and cons of buying off-the-plan apartments in this article.
“There are many good reasons to buy an off-the-plan apartment in Canberra, but you need to look behind the sophisticated marketing and make an assessment that works for you,” Peter Maloney, Founder and Principal at Maloney’s Property, explained.
The top five pros and cons of buying off-the-plan apartments in Canberra, according to Maloney’s Property, are:
The pros of buying an off-the-plan apartment in Canberra
The major benefit of buying off-the-plan apartments is that the price is locked in at the time you pay your deposit. Therefore, if property prices and inflation increase, you are protected.
Because developers need to sell a large proportion of their developments before they can secure loans for construction, there are sometimes considerable discounts to be taken advantage of at the pre-construction stage.
At the pre-construction stage, there is also the potential benefit of having input into the design and interior style of your apartment.
As an investor, you may be eligible for some tax benefits when buying an off-the-plan apartment.
For example, stamp duty is usually due within three months of the contract date for investors. However, with off-the-plan purchases, stamp duty is extended to 15 months after the contract date or the date the property is completed (for those who intend to live in the property).
You will usually have up to 24 months to organise your finances for the final purchase, giving you time to start saving without the added financial burden of making mortgage payments.
Being able to save an additional 10 per cent during this period will put you in a much better position when you approach financial institutions for a loan.
Another option is to take out a deposit bond for a small fee (investors can claim this back).
The cons of buying an off-the-plan apartment in Canberra
There could be increased costs if the building isn’t completed on time. These could include continuing renting until your property is ready or ongoing storage costs for your things while you wait.
Also, the property may not meet your expectations once it is built and may be different to what you were led to believe it would be.
Your deposit may not be secure if the developer goes bankrupt before they complete the project. It is important that you look at the details in your contract in relation to this.
The final property value might be lower than anticipated, affecting borrowing capacity. Other factors, such as personal income changes and interest rate fluctuations, may also impact loan eligibility.
An influx of investors wanting to sell upon development completion could lead to an oversupply, and the value of your property could drop in the short term.
If your developer runs into trouble, they may cut corners by not delivering what was originally promised. This could include downgrading finishes or changing the design.
“There are many benefits to investing in off-the-plan properties in Canberra, but it pays to seek the advice of a professional with experience when purchasing and managing your investment property,” Peter concluded.
If you would like to discuss your off-the-plan investment options with an expert from Maloney's Property, schedule an appointment today.