If you’re considering buying a property in Perth, you may be weighing up the pros and cons of buying off the plan versus established.
‘Off the plan’ means entering into a contract to buy a property prior to it being completed, often before construction has even begun.
And there are plenty of options to choose from, with the Perth property market currently experiencing a major boom in new apartment developments. Several new high-rise developments have been approved for construction in suburbs across the city including the CBD, South Perth, East Perth and Rivervale.
So what are the pros and cons of purchasing an off the plan versus established property?
Buying off the plan
• By purchasing a property off the plan you can lock in the price now, giving you a much longer period to arrange your finance whilst the property is under construction.
• If you are first home buyer in WA, you can still claim the $10,000 first home owner’s grant for newly constructed properties.
• Brand new, shiny and modern – you are the first owner of the property.
• If you are purchasing for investment purposes, newly constructed properties tend to achieve higher rental yields
• Buying off the plan means just that –you can’t see the finished product until it’s built, and it may differ to expectations.
• If the market drops, the value of the property may be less when it is completed, which can cause issues with bank valuations and finance. You may need to come up with extra funds to cover the shortfall.
• The contract may contain clauses which allow the developer to change aspects of the building design, or even the agreed sale price. Don’t sign anything without having a solicitor check the contract first!
• Oversupply issues – it’s a good idea to research whether there are going to be other new properties built in the area you are buying as it could affect the value of your new property.
• Strata fees could be significant, so it pays to do your research.
• Affordability – the softening Perth property market means there are plenty of affordable, established properties for buyers to choose from.
• Unlike off the plan purchases, you can physically walk through and inspect the property.
• Older style buildings offer the potential to renovate in order to increase value.
• Ready to move in – once you have your finance sorted, you can usually move straight in. No waiting around for construction to be completed!
• Ongoing maintenance costs – older buildings generally require more maintenance and you will need to allow some lenience in your budget for these costs.
• The $3,000 first home owner’s grant has now been abolished for established property purchases in Western Australia.
• If you are purchasing for investment purposes, it may be more difficult to find a reliable tenant particularly with the number of new apartments flooding the Perth market.
Overall, there is a lot to consider when deciding whether to purchase off the plan versus an established property. It’s a good idea to speak to your local Perth mortgage broker about your borrowing power and finance options before starting your property search. Contact us today on 9277 9888 or click on the Contact Us button at the top of this page.