Is buying an ‘off-the-plan’ property worth the risk? N G Farah explores the positives of taking the risk of investing in an 'off-the-plan' property, especially for the first time home buyer.

With property prices soaring at an unprecedented rate in all major cities across Australia, there has been much speculation regarding the benefits of purchasing an ‘off-the-plan’ property; especially for buyers entering the property ladder. 

There is no doubt that buying an ‘off-the-plan’ property has positives but they come at a risk as essentially you are buying a promise of a home that has not yet been completed. As a buyer, if you don’t do your due diligence to yourself, you could fundamentally lose hundreds of thousands of dollars in your purchase - which is a hard blow to suffer in our advancing property market.

However, do your research and, you could be profiting up to $600,000 on one ‘off-the-plan’ purchase. In this instance, by the time the apartment block project in Coogee had been completed, three years after the initial purchase date, the property had increased significantly in value. This does not happen every time, but it also isn't just an isolated exception to the norm. It all depends on when you buy in the property construction cycle, the location and the risk you are willing to take.  

There are advantages, such as reaping the rewards of government incentives and tax depreciation benefits which can make it an attractive investment. First time home buyers can also enjoy exemptions and concessions of stamp duty, and government grants. Not to mention, the ‘newness’ of the property – no one has lived there before, the features are pristine and the design is usually more sophisticated than older properties. 

If you’re considering purchasing an ‘off-the-plan’ property, there are some tips to consider:

• Engage with a trusted real estate agent who is representing the developers of the project – in most cases the agent will not represent the developers if they aren’t going to deliver a quality product to their clients.
   
• Research the sale prices of similar properties in the area to ensure you are paying a competitive price.
   
• Know the local market and whether there are plans for further residential developments as this can impact the resale price of your property.
   
• Try to purchase in the first release of the project, as developers usually discount the first 10 – 20 sales.
   
• Do your research on the developer and whether they have a good track record in delivering quality developments.
   
• Make sure the developers has contracted a builder before you purchase and research the contractor’s past performance and projects.
   
• Make sure you have a solicitor thoroughly review the contract – ‘off-the-plan’ contracts are often in the developers favour, therefore it is important to know what the contract is outlining for all eventualities.
   
• Be aware of a sunset clause and ask your solicitor to explain the clause in detail within the contract.
   
• Have the 10% deposit to exchange in the form of a bank cheque or deposit bond, and make sure you have pre-arranged finance before you exchange contracts, even though settlement may take 1 – 2 years.

N G Farah are renowned for offering quality ‘off-the-plan’ projects to our clients over the decades. Past notable projects include; Alume - Little Bay Cove, Bay Gardens - Maroubra, Centennial - Randwick, Matraville Gardens - Matraville, Prince Henry - Little Bay, Star Garden - Kingsford and, The Peninsula - Matraville. 

We have our own specialist project marketing division, and currently have the following projects For Sale;

• Pinnacle at Coogee
  
  
• Illume at Little Bay Cove
  
  

• ​S Pagewood by Silkari
  
  
• Inspire in Botany