Demand for new apartment developments has grown significantly in the last year, with enquiries on realestate.com.au up 27.0% year-on-year in May, according to PropTrack. Also on the rise in the development of new apartment buildings, up 4.8%. But, like all property purchases, there are some factors to consider.
- Opportunity to customise. Some developers offer buyers a level of customisation for off-the-plan apartments. This could include selecting finishes like flooring or countertops. Some will even allow for minor modifications to the internal layout of the preporty. This allows you to personalise the space, making it more suitable for your desired tenants’ lifestyles.
- Potential for capital growth. Buying a new apartment may mean you take advantage of rising dwelling values. For example, PropTrack’s home price index showed that unit prices have grown 5.6% nationally in the 12 months to June. And, prices are expected to continue growing, with Domain forecasting between 2% and 4% price growth over the 2024-25 financial year for units. Although units tend to increase in value slower than houses, there is still large potential for sustained capital growth in this market.
- Potential for stamp duty savings. In New South Wales, if you are buying off the plan and intend to live in the home yourself, you will not have to pay transfer duty until:
- 15 months after you enter into the agreement to buy or transfer a property or,
- If the contract is completed within the 15 months, at the time of completion or the handover of the property.In order to qualify for this concession, you must move into the home within 12 months and live in the property for at least six months.
- Builder’s guarantees. A builder’s warranty is the protection the homeowner receives from the builders in case of defects or issues arising after construction is finished. In NSW, the builders must provide a statutory warranty, mandated by law, which covers major defects for six years and all other defects for two years beginning from the date the work was completed. This gives buyers peace of mind, ensuring that any problems encountered within the warranty periods will be addressed by the developer or builder.
- Research. Buying an off-the-plan apartment can be an exciting opportunity, offering the chance to secure a brand-new property with growth potential. However, it’s not without its risks. Buyers should carefully research the developer, location and scrutinise the contract to ensure the property aligns with your requirements and financial goals.
Off-the-plan apartments can be a tempting purchase for buyers or investors looking for easy-to-maintain properties with high rental demand.