FROM THE BLOG

Buying property is a significant financial decision that requires careful consideration, especially in Victoria, where the real estate market can be competitive and prices vary widely across different regions. One option that often piques the interest of prospective buyers is purchasing property “off the plan.” But, is it truly cheaper to buy property off the plan in Victoria? Let’s delve into the factors that can influence this decision.

Understanding Off-the-Plan Purchases

Buying property off the plan means purchasing a property before it’s been built or completed. Typically, developers promote these properties by showcasing detailed plans, designs, and sometimes, even display units. Buyers commit to the purchase based on these plans, and construction often takes place over several months to years.

The Potential for Cost Savings

There are several reasons why buying off the plan might be perceived as cheaper:

1. Early-Bird Pricing: Developers often offer attractive prices and incentives to entice early buyers. These initial prices can be lower than the market rate when the property is completed.
2. Stamp Duty Savings: In Victoria, stamp duty for off the plan properties can be calculated based on the value of the property on the day of sale, rather than completed price. By locking in a lower off-the-plan price, buyers may pay less in stamp duty compared to buying a completed property at a higher price.
3. Potential for Capital Growth: As the property market generally appreciates over time, buying off the plan might result in capital growth by the time the property is completed, potentially increasing its value.
4. New Home Incentives: New properties often come with warranties, modern designs, and energy-efficient features, which can lead to lower ongoing maintenance costs.

Consider the Risks and Costs

While there are potential cost savings, it’s essential to weigh them against potential risks and costs:

1. Market Fluctuations: The property market can be unpredictable. A property’s value may not increase as expected, or it could even decrease before completion. In the case of land estates, oversupply of land and resales by purchasers in adjoining land estates or previous stages can bring down property prices in the area and cause issues with bank valuations at settlement. With apartments and units, low quality building works and amendments to the plans and specifications before settlement can both heavily effect the value of the finished property.
2. Delays: Construction delays are not uncommon in off-the-plan purchases, which can impact your timeline and financing.
3. Changes in Personal Circumstances: Life changes like job loss or relationship shifts could affect your ability to complete the purchase when the property is ready.
4. Unknown Outcomes: When buying off the plan, you have limited information about the finished product, which could lead to unexpected issues or disappointments.

Conclusion

Whether it’s cheaper to buy property off the plan in Victoria depends on various factors, including market conditions, the specific development, and your financial situation. While there can be cost savings and potential for capital growth, there are also risks to consider. It’s crucial to conduct thorough due diligence, work with an experienced conveyancer, and carefully assess your personal circumstances before making an off-the-plan purchase.

Ultimately, the decision should align with your long-term financial goals and lifestyle preferences. If you’re considering an off-the-plan purchase in Victoria, consult with a professional who specialize in property conveyancing to navigate the process successfully and help you make an informed decision.

Further information on buying property off the plan can be obtained from the State Revenue Office website here: https://www.consumer.vic.gov.au/housing/buying-and-selling-property/buying-property/buying-off-the-plan or by contacting ConveyancingX.