When is the best time to buy off the plan?

Series: Selling Off The Plan

‍Taking the leap from selling only established property to also selling property off the plan, requires a careful and considered approach to leveraging old skills and learning new ones. It means developing an understanding of the unique needs of a buyer who is purchasing a ‘vision’ without being able to see and feel a property before committing to it. 

‍In part two of our ‘Selling Off The Plan’ series, we explore why timing is important in off the plan sales, and how you can communicate the right time to purchase, to your buyers. 

When it comes to real estate, the fact is, almost any time is a good time to buy or sell. Why? Because more-often-than not, a purchaser or a property owner is making the decision to take action due to specific circumstances in their own lives – property is personal. 

Births, deaths, marriages, new educational or employment arrangements, financial challenges or wins – all of these factors and more can influence the decision to buy and sell, and typically, they have little to do with markets, economies or other external factors.

Whether the economy is growing or declining, the market is at a peak or at trough, people’s lives continue to change, and their property requirements change with it. 

Despite this, there are obviously better times to make a move than others – more lucrative times for each party, times within which more options are available, times when the desired outcome will be faster and more easily achieved. 

For off the plan property, that optimal time is… right now! Timing has been ideal for the last few years, and will likely remain ideal for the next few. In this article, we’ll explore why that's the case, so you can share those insights with your prospective buyers and support them in making more informed decisions.

Helping buyers firstly understand that ‘any time’ is the right time to purchase, if it’s what’s needed in their lives, and in reverse, that no time is really ‘wrong’, can help ease a lot of their stress and tension. It can ensure they don’t get caught up in trying to mould themselves around a market, when really, their own personal needs and conditions should be key to their decision. 

Adding value to your service by also educating them about the market and how it works can not only ensure they purchase at a time that is most advantageous to them, but also strengthens your relationship with them.

Relationships are the absolute core to successful off the plan sales, and sharing expertise can really cement longevity. 

Identifying optimal times to purchase off the plan

Reading the property cycle

As a sales partner, you are likely just as aware of the property cycle as you are of petrol price cycles – because your success depends on it. Understanding the cycle, being able to pinpoint the current phase, and identify the signs we are transitioning into the next phase, can make or break your career.

When transitioning into off the plan sales, it’s important to know, and to communicate to buyers, that while the cycle remains the same, the level of opportunity in each quadrant can be different for established property versus off the plan property. 

That common flow we all know from boom to slow down to trough, from recovery and back up to peak still applies, but while the opportunity for established property is greatest during the downturn/contraction, the opportunity for off the plan purchase is greatest during the boom/expansion phase. 

During this former phase, property prices are declining, and there is less competition among buyers. This provides opportunities to potentially purchase established properties at a lower price, with more room for negotiation and for future appreciation when the market recovers.

In contrast, when the market is expanding, prices are rising and demand is high, buying off the plan can lock in a lower price before further increases, providing potential for substantial capital gains by the time the property is completed or even before.

While general consensus is that the Australian housing market reset in 2023, it should be noted that it is fragmented into smaller markets, with some areas outperforming others. Though the cycle has traditionally been said to last seven-to-ten years, commentators like Michael Yardney suggest more recently, it is less certain, potentially lasting only around four years. 

‍Opportunities outside expansion and boom

Though understanding the optimal times during the property cycle to buy off-the-plan is crucial, it's equally important to recognise good opportunities do exist outside these periods as well. The property market, like any market, is dynamic, and there are a number of factors that can make purchasing at non-peak times beneficial.

1. Personal circumstances drive decisions

Going back to the start of this article, the decision to buy property is often driven by personal circumstances rather than market conditions. As a sales partner, acknowledging these personal drivers and aligning them with market opportunities can empower a positive outcome for your clients. 

Buying outside boom does not mean opportunities dry up, and communicating this is really important. Buyers will trust a savvy and knowledgeable sales partner, so doing that homework to present those ideal options can really be a win-win for all involved. 

2. Market fluctuations and fragmentation

Market fragmentation means that even if the overall market conditions aren't optimal, specific regions or property types may still offer lucrative opportunities. For example, emerging neighbourhoods or upcoming infrastructure projects can create pockets of growth and value. 

Being the sales partner who not only has their ear to the ground, but draws on rich data to inform buyers of their options can help them make choices that will be beneficial to them now and in the future. 

3. Less competition can mean more negotiating power

During non-peak times, there can be less competition among buyers. This decreased competition can be advantageous, providing them with more room to negotiate on price and terms – and an informed buyer can often spot this and swoop. Additionally, developers may offer incentives such as discounts, upgraded finishes, or flexible payment plans to attract buyers during slower periods. These incentives can significantly enhance the value proposition of buying off-the-plan.

4. Growth potential

Buying during a market downturn or when conditions are less favourable can position buyers to benefit from future growth. As the market recovers and moves into the next phase of the cycle, properties purchased at lower prices can appreciate, resulting in substantial capital gains. This is a much longer-term perspective, but is useful for patient investors looking to maximise their returns.

Building trust and educating buyers

As a sales partner, educating your buyers about the cycle AND the potential benefits of purchasing outside the perceived ‘optimal’ times can really demonstrate your expertise. 

By providing insights into market dynamics and showing how buying at different times can still align with their goals, you add significant value to your service. 

As noted, though the boom phase possibly offers the best timing for buying-off-the-plan, people purchase property all year long, every year, as their lives change. Expanding their options from the small numbers of established properties on the market, to brand new off the plan properties, untouched by any previous owners, provides them with greater flexibility to find a home that perfectly suits their needs and preferences.

Stay tuned for part three in the series, where we ask the question  'why buy off the plan?' and compare this opportunity to selling and purchasing established property.

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