In a challenging housing market, many new buyers and investors are searching for measures to stay ahead of the pack. While ‘off-the-plan’ purchases may be seen and sold as a prudent and risk-free investment, many buyers have been stung by unforeseen expenses and eventualities. To help determine if this is the right investment strategy for you, we have compiled five risks that buyers must consider for off plan purchase.
SUPPLY CAN EXCEED DEMAND
Economics 101. If the number of potential renters and buyers seeking properties are exceeded by the number of properties on the market, the value of your asset will suffer. The rate of new properties being built fluctuates monthly and yearly, so make sure you do your local area research before considering off plan purchase.
We mentioned the potential for capital gains in buying off the plan in our blog post last month , but it also worth considering the converse. If your off plan purchase doesn’t go ahead due to circumstances beyond your control, your money will be tied up indefinitely in an investment when it could be accruing interest or capital gains elsewhere.
The core aim of off plan purchase is maximising value in your investment based on future projections. If the figures you work upon are ambitious, you might be setting yourself up for disappointment in a few years time. Mitigate the risk of off plan purchase by researching property values in the local area in great detail and seeking professional advice on future trends. Optimism bias can be the undoing of off the plan investment – don’t let it happen to you.
Whether due to misfortune, oversight or poor workmanship, off the plan properties are sometimes not delivered as perfectly as promised. You are entitled to request a settlement inspection when taking ownership of your property, after which your builder will have three months to remedy any defects. Larger defects which could affect the long-term value of your property may become a point of contention between yourself and your builder. If you’re after an outstanding builder in Queensland, we can help you out there .
INTEREST RATE VOLATILITY
While our current record-low interest rates are spurring investors to get involved in the housing market, rates are liable to change at a moment’s notice. As off plan purchase is predicated on future projections, it important that you fully understand where the market might go if opting for a variable rate home loan. Not factoring in interest rates could slice all of the profit out of your investment.
THE END RESULT MAY NOT BE WHAT YOU VISUALISED
Computer generated graphics simply do not tell the full story of what your finished project will look and feel like. While floor plans and projections allow you to form a solid idea of the feel your property will have, the end result might not meet your expectations. For buyers using off plan purchase to build a home for their family, this might be a greater consideration than for those who are merely building an investment property.
For those who want to see their off the plan design in person, Homes By 米6体育竞彩 offer a range of display homes to tour in four different locations across Queensland. For a closer look at the materials, fittings and luxury inclusions we use in our homes, our showroom in North Lakes is open to the public from 8:30am to 5pm Monday to Friday and on weekends by appointment.
Homes by 米6体育竞彩 offer a range of turnkey single and double storey ready built homes for sale, and can work with you to create the perfect custom design. We offer a best price guarantee on our range of quality builds, including high quality fittings and luxury inclusions. To discuss off the plan options with our friendly team, contact us online today or call (07) 3188 9324