Purchasing a property “off the plan” or before construction, is an option which is once more becoming popular in Cairns as available supply of property dries up and buyers look to lock down future opportunities (and the all important government grants on offer).
Whether purchasing an apartment or house under construction (or often before) or securing raw land, there are a number of pros and cons when it comes to this type of purchase.
On the plus side, as a buyer you are able to lock in a price NOW, whilst giving yourself the opportunity to plan ahead/save longer, particularly in the case of apartments where there can be 12 months (or more) between signing the dotted line and having a finished product that’s ready to move in. With grants like Homebuilder time sensitive and developed land stocks approaching zero, it also gives buyers the opportunity to sign contracts in time for eligibility, where they might otherwise miss out.
In a rising market, buying off the plan can also yield additional equity before its even yours – as the market rises and the value of your purchase is higher than your agreed price by the time it settles.
On the downside, committing in advance means you are COMMITTED subject to those terms. You might have a change of circumstance in the time between signing and settlement that means you aren’t in the position to continue anymore, or it might no longer suit. Imagine for example a young couple that have signed on the dotted line for a 1 bedroom apartment, only to find they’re expecting twins 6 months later!
Depending how early you are signing can also mean changes in the finished product. If you are purchasing a property where the civil works are done and construction is underway, then you have a pretty good idea of what its going to look like, size etc. When its still a vacant site in town or a canefield in the suburbs - there is a bit more uncertainty.
How do you make sure off-the-plan is right for you? as always, do your homework. Who is the developer? The builder? Have they done projects in your area before, do they have a reputation or is this a first time? Above all, when it comes time to sign, get it to your solicitor BEFOREHAND. That way you can be more confident in your decision, and look forward to the end result with excitement, not trepidation.