The recovery in Sydney’s housing values accelerated in August 2019 with CoreLogic reporting dwelling values in the NSW capital increased by 1.6% during August and rose by 1.9% for the quarter.
In response, demand for ‘off-the-plan’ apartments in Sydney is collecting speed with downsizers (also called ‘right sizers’) leading the charge, according to Ben Ayers, Project Sales Consultant, Raine & Horne Projects. “We have reached the bottom of the market, and apartment values are predicted to rise.”
Buying off-the-plan means entering into a contract to purchase a property before or during the construction phase of a property or a development.
There are several advantages with buying off the plan, including the ability to lock buyers into a price at current values. In Sydney, the median apartment price is a tick under $700,000, according to CoreLogic. “With the market on the move, many buyers see buying off-the-plan, which involves paying a 10% deposit as a way of locking in at current values.”
Getting in early before the market takes off and buying off the plan will be highly advantageous for buyers, as developers are looking for presales. “This means they will usually be more prepared to discount or offer certain incentives such as stamp duty rebates and extra or superior levels of fixtures and fittings,” says Ben. “Also purchasing before or during the construction phase now means you’ll be paying less than later in this price cycle, as a completed property ready to move into will always cost that little bit more.”
Buying off the plan also means securing a property with modern fixtures that are covered by manufacturers warranties, as well as getting access to resort-like communal facilities such as pools and gyms. “Older right sizers are targeting new complexes that have lifts, so they don’t have to worry about the stairs,” added Ben. “Older boutique blocks may not come with elevators.
“Right sizers seem to prefer the resort-like facilities of brand-new apartment blocks. The difference is that they can take a dip whenever they like but without the worry of maintaining the, which is often the reason they downsized from the bigger family house in the first place.”
For investors, there are definite tax benefits from buying a new property. “Unlike an older apartment, investors who buy new property get the full benefits from the depreciation of the property, it’s fixtures and fittings,” Ben noted. According to BMT Tax Depreciation, a completed property purchased off-the-plan will typically attract between $8,000 and $14,000 in depreciation deductions in the first full financial year.
Ben also acknowledges that buyers must be careful when purchasing new properties in the wake of development issues with several tower blocks recently. “Always check out the builder’s history, the length of time they’ve been operating and put effort into checking out some of their previous developments for yourself,” Ben advises. “I’d especially inspect some of their developments built 5-10 years ago to ensure they have stood the test of time.”
To find out more about buying off the plan, contact Raine & Horne Projects on 02 8052 0000.