House and Home Design - Realestate Passion
HOME seekers still have a wealth of opportunities to purchase units off the plan in areas where prices are increasing — despite a wider slowdown in the Sydney housing market.
Property experts said price falls in the wider Sydney market have not affected every suburb, which has meant families who do their homework can buy units off the plan with little risk.
They can also capitalise on some of the advantages of buying off the plan — the industry term for purchasing a home before it is built.
The main benefit is that buyers don’t require a big financial outlay. They only need to put down a small deposit to secure the home, with full payment required once the project has been completed. This allows buyers time to organise their finances.
Then there’s the obvious benefit of buying a blank slate. Some developers will allow buyers to choose their floorplan and colour schemes.
The biggest risk for buyers is that if the market is declining the price they pay may actually be higher than what the property will be worth when it is completed. This means suburbs where values are still rising are safer bets for off the plan buyers.
A recent report from Corelogic suggests the current safest market for buying off the plan is the Central Coast. It was the only major region in the Greater Sydney area where prices increased over the 12 months to August, growing at an average rate of 1.6 per cent.
Other fairly safe markets were the southwest, where prices fell by only 1.6 per cent, and the eastern suburbs, where the decrease was 1.9 per cent.
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CENTRAL COAST PROPERTY MARKET LEADS THE CHARGE
By contrast, prices in the Hills fell by an average of 9.2 per cent for the year — the largest in Sydney.
At a suburb level, some areas have defied a wider slowdown in their surrounding region to post growth for the year. These suburbs included Bondi Beach, Leichhardt, the Sydney CBD, Brookvale, Cammeray, Neutral Bay and Manly, where median prices increased by more than 10 per cent for the year.
Propertybuyer.com.au director and buyer’s agent Rich Harvey said buyers could mitigate the risk of buying off the plan with research.
“Settlement and valuation are one of the biggest risks,” he said. “If you buy off the plan and there is a market decline, you will have to cover the difference come final payment.”
He added that choosing the right area was vital. “You’re looking for low supply and high demand. When the opposite is the case, prices flatline or go backwards.”
Mr Harvey said that he has also seen examples of developers either under delivering on promises or taking longer than they initially agreed to build their projects. “Make sure you check for variation clauses in the contract,” he said. “I’ve seen examples of apartments that have been promised to buyers at a certain square metre size that have been reduced due to this clause.”
Principal of McGrath Terrigal, Jaimie Woodcock said the Central Coast was a strong performer due to its affordability.
“Over the past 18 months, the surge in Sydney prices clearly tipped a vast majority of the region over the affordability point,” he said. “Our property prices are seen as good value for buyers moving into the region and with continued population growth I’m confidently predicting price growth over the next decade.”
Several high-end developers have invested in the region, including the Pinnacle Construction Group.
Sasha and Zobair Bary know the benefits of buying a unit off-the-plan and the concerns.
They bought a new home two years ago at Merindah Apartments on the Gosford waterfront — a high-rise project being built by the Pinnacle Construction Group.
Their three-bedroom apartment with water views cost $695,000, but selling agent Pablo Gutierrez of JPG Property Services said today it would be closer to $1 million.
The property was a spontaneous investment for the pair, who moved north from Sydney two years ago.
“We had never purchased off-the-plan before, but we realised Gosford was becoming a big development area, and we’d seen similar regions in Sydney grow the same way,” Mrs Bary said.
“We did look at the risks, but with a heap of new development in Gosford, we are quite confident that it will increase in value. We looked carefully at the contract with our solicitor.”
Mr Harvey said buyers should check the reputation of the developer before purchasing. “Check the details on finishes. Rather than saying a ‘stainless steel’ kitchen, you want them to specific the type of appliances like Miele or Smeg.”