Buying property off plan? Here's what to think about
Thursday 18 Mar 2021
With property listings in low supply and demand for property as high as ever, many buyers are broadening their property search to include off-plan opportunities.
Why buy off-plan?
There are a number of reasons why people choose to buy Queenstown and Dunedin property off the plans. The first of these is the sheer joy of having a brand new home. New properties are built to up-to-the-minute Building Code, giving them better thermal, moisture and acoustic ratings. Another significant benefit of an off-plan property is the builder/developer warranty, which often covers you for up to 10 years.
Pricing is another major point of appeal – purchasers generally pay a small deposit upon signing the contract and then nothing more until settlement on completion of the project. During this time, prices may have risen, meaning you’re paying below market value for a brand new home. Capital gains on a new property can often out-perform those on existing dwellings, especially in the first few years. However, bear in mind that the property market goes through peaks and troughs, so it’s possible the price will plateau or even decline during the build time.
For first home buyers, particularly in the Queenstown market, buying off-plan can be appealing due to the lower deposit requirements. New builds only require a 10% deposit due to an exemption from current LVR rules, making it easier to get on the property ladder.
Tips for buying off-plan
Do your homework – research the developer and their past projects to get a good feel for the likely quality and delivery of a project. Also, take time to review what else is on the market and how the cost and offering compare. For apartment developments, cost per square metre is often used as a comparable metric.
Talk to a solicitor – contracts for off-plan sales can be more complex than existing properties. Ensure you have a full understanding of all documentation and comprehend your exit options should there be issues with the development. Also, ensure the contract includes a comprehensive list of inclusions.
Take it back to basics – it can be hard to visualise what your asset may look like when buying off-plan, and it’s easy to get caught up in the beautiful marketing imagery, so take it back to the things you would look at in any new home; size, sun, views, layout and spec. Disputes can arise when the buyer is not satisfied with the finished product, so focus in on every detail.
The finishing touches – buyers often want to make small changes to a property as they see it take shape. Before committing to a contract, make sure you know what can and cannot be customised to avoid disappointment later.
Colliers Otago has several off-plan opportunities currently available that are attracting strong interest. Click through for more information:
