Who should not buy off the plan?
Buy now, make money in your sleep!! Great when it works – and I won’t deny it can. But buying off the plan is not without its own risks – let’s look at what they are so we can work out who should NOT do it.
To be clear, I’m talking about long term off the plan sales, something where the land or the unit won’t be ready for 18m or longer. And most particularly this does apply to units simply because when any given development is completed there’s a lot of competition isn’t there, such a concentration of properties in one block – if even 2% of them are “on the market”, its multiple properties right in front of the one buyer – as opposed a whole street of homes where maybe one is on the market. Further – they’re mostly identical or at least fairly similar, so the only way to compete is on price.
1 – Valuation risk
When you agree to a price today it’s on the assumption that prices will be at least that or higher when the development is complete. It’s speculative and slightly risky. What can happen is a valuer comes in at completion and compares your (shiny, sparkly brand new) unit to others in the area that have the same attributes and have recently sold and settled. Should be cool. Note they will only compare against settled sales of existing units – what we call secondary sales - and nothing else in the same development as you. That’s just how the market is defined.