Why buy off the plan?

Series: Selling Off The Plan

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‍Snapshot

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Buying off the plan can offer property investors, and those looking for their new home, benefits that aren't always available to those purchasing established residences.

• ‍Purchasers are often given the chance to customise the finishes and even layout of their apartment.
• Each residence is fit out with modern, high-quality appliances, and features on-trend design.
• With units being brand new, maintenance is minimal compared to existing property.
• Buyers can often take advantage of financial incentives for purchasing new builds.

Read the full article below for all the details.

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Switching from selling established properties to off the plan properties demands a strategic approach that combines your existing expertise with new techniques. This transition involves recognising the distinct needs of buyers who invest in a property they can’t yet physically experience.

In part three of our ‘Selling Off The Plan’ series, we ask and answer 'why buy off the plan?' — highlighting the advantages and opportunities for your buyers and arming you with a toolkit of benefits to share with them. 

Australia’s current property landscape presents a unique set of opportunities and challenges driven by housing shortages, cost-of-living, urbanisation and a range of other factors. With our population on the rise, and a strong demand for modern, sustainable living spaces, the off the plan market is experiencing significant growth. 

According to industry reports, in recent times, off the plan sales have seen growth of around 20% year-on-year, despite accounting for only around 6.5% of contracts for sale (Marsdens Law Group).

These trends highlight the increasing appeal of buying off the plan among savvy investors and homebuyers who are seeking to capitalise on future market potential, as well as the shortage in supply.

Understanding the many advantages and opportunities buying off the plan can offer your purchasers, can enhance your ability to guide them on their hunt, and empower them with much more informed decision-making. 

Unlock off the plan potential

While you might see the advantages of buying off the plan as quite clear, for sales partners freshly transitioning to selling in this space, and buyers who are considering it as one of multiple options, some benefits can be a lot less obvious. Here are some of the main positives:

Potential for capital gains

One of the primary benefits of buying off the plan is the potential for capital gains. 

Buyers can lock in a purchase price at today’s rates, even though the property will not be completed for several years. 

In a rising market, this means the value of the property may appreciate significantly by the time it’s ready for occupancy, providing a substantial return on investment without any initial capital outlay beyond the deposit. The property can literally be worth much more when the buyers first step foot in it, than when they initially committed to purchasing it. 

Customisation opportunities

Purchasing off the plan often allows buyers to customise certain aspects of their future home. By choosing finishes, fixtures, and colour schemes, buyers can personalise their property to better suit their tastes and needs. 

While finishes are a win, the capacity to adjust the floorplan to better suit your family’s needs is not available across all types of residential real estate, but can sometimes be on offer for off the plan.

Modern amenities and design

New developments typically feature modern design, energy-efficient technologies, and state-of-the-art amenities. Buyers can benefit from contemporary architectural styles, open-plan living, advanced security systems, and sustainable building practices that reduce long-term operating costs. These features can enhance the property’s appeal and liveability, making it a more attractive option for renters or future buyers.

Lower maintenance costs

Brand-new properties usually come with warranties on construction and appliances – something almost never offered with established properties – reducing maintenance costs in the initial years and beyond. 

Stamp duty savings

In many regions of Australia, buying off the plan can offer significant stamp duty savings. These savings occur because the stamp duty is often calculated on the land value alone, rather than the completed property’s value.

Some states also reward those who build new homes, rather than buying established property, with further rebates and incentives. Knowing what incentives are available in your state or territory can be a valuable part of your selling toolkit.

Assessing the opportunity

Ultimately, in order to succeed, property purchasers and investors need to take a step back and fully assess the entire situation – it can be easy to get caught up in the wonderful idea of 'newness' or 'nowness', but which is really for them?

As their sales partner, this is where you come in! By providing the right lens through which to explore each benefit, and clear questions to help them evaluate the opportunity more effectively, you can guide them towards the outcome that is most suitable.

Question 1: Are you focused on immediate returns or long-term growth potential?

Asking this question helps buyers consider the motivations for their purchase, beyond the obvious. Do they want to simply solve the problem immediately in front of them ('we need a home' or 'we want to invest in property') or are they hoping to plant a seed that will grow into greater rewards?

Established properties offer the certainty of immediate occupancy and known quality (whether good or bad), but immediate growth may be limited.

Off the plan purchases, on the other hand, present an opportunity to capitalise on changing market conditions, with the added benefit of tailoring a property to exact specifications. It’s a forward-looking approach that aligns with long-term investment strategies and lifestyle aspirations.

Question 2: How much of the vision needs to immediately be reality for the purchase to be rewarding?

Often when buying established property, by exchange, purchasers will already be formulating the list of changes and upgrades they will make in order to ensure the home meets their needs and desires. After all, a home that someone else built to their specifications, will never be perfect for the next occupants.

While established property can be seen as immediate gratification, in fact, anecdotal evidence suggests the completion of these desired alterations often takes years, meaning even in a home that already exists, realising the vision, can be a long-term commitment.

While similarly, there is a wait with off the plan, buyers can move into a home that meets their specifications from day one, without the need for extensive and expensive upgrades or an extended vision for improvement.

Question 3: What risks are acceptable?

The nature of risk for established and off the plan properties differs, and the buyer needs to consider which risks, and to what degree, are more acceptable to them.

Firstly, established properties are immediately influenced by current market conditions, while off the plan investments are more speculative, relying on future market performance. However, this speculative nature can work to the buyer’s advantage, allowing them to secure a property at a lower cost with the potential for significant appreciation.

When it comes to quality, it can seem established is less risky, and yet, the purchase can hinge on the completion of quite a superficial inspection, with hidden problems often left unidentified. Though the specific off the plan apartment can't be assessed in advance, third party certifications, like iCIRT ratings for builders and developers should comfortably reassure a purchaser of quality, and unlike established property, warranties are usually in place to protect those who buy new builds.

Question 4: Who are you trying to appeal to?

With interest rates having increased notably over recent years, return on investment is important. A combination of factors can mean rental yields enjoyed for off the plan can, at least initially, be more than those for established. But the question is, which property appeals more?

The modern nature, surrounding amenities and locations of off the plan properties, along with low-maintenance upkeep and changing regulations regarding pets, mean they are of increasingly high appeal and strong demand to renters. Additionally, apartments often offer a higher rental yield than houses, and most off the plan properties are apartments.

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Buying off the plan offers a sophisticated investment strategy, blending financial foresight with the ability to create a personalised, modern living space. While it requires a nuanced understanding of market dynamics and a willingness to embrace future potential, the rewards can be substantial. 

By recognising these opportunities and leveraging them effectively, agents can guide their clients towards making informed, strategic property investments that align with their short and long-term goals.

To find out about off the plan opportunities, contact our team.

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