Don’t rely on luck. Do the groundwork first

INVESTORS rushing into brand‑new and off‑the‑plan properties are being encouraged to do their homework first.

Buyers anxious to preserve negative gearing and capital gains tax benefits should rethink their approach, with a new‑build specialist warning many are skipping essential checks and exposing themselves to avoidable financial risks.

Access Wealth managing director and founder Dory Senior said the post‑Budget pivot had created a dangerous belief that new builds are a guaranteed solution or “magic bullet” for the years ahead.  

“The risk isn’t in buying new, it’s in buying new without doing the groundwork,” Senior said.

“When people chase negative gearing without understanding the fundamentals, that’s when they get caught out.”

Senior said most mistakes in the new-build market stem from investors skipping the basic sequence of decision-making, such as starting with the property instead of first assessing their goals, financial capacity, market fundamentals and the credibility of the builder.

“If you don’t work through those steps in order, you’re relying on luck, which is never a sound strategy,” he said.

He said some investors were being lured into new-build contracts without understanding builder insurance limits, construction delays, inflated pricing or the difference between full-turnkey and partial-turnkey contracts.

“We’ve seen people handed a property with no driveway, no landscaping or no blinds because they didn’t know what to look for,” Senior said.

Senior added the first step for buyers is understanding your goals, something many investors may skip entirely in the rush to secure a tax-advantaged property.

“If you don’t know whether you’re investing for retirement, income or to pay off your home faster, you can’t judge whether a property is fit for purpose and that’s where poor decisions start,” he said.

Senior said the second step, assessing resources, has become the biggest pressure point since the Federal Budget.

“Your borrowing capacity, equity position, and weekly affordability matter far more than any retained tax benefit,” he said.

“Banks removing negative-gearing add-backs for established properties is already cutting borrowing capacity by $150,000 to $200,000 for some investors.”

A key part of this assessment, he said, is understanding the true cost of holding a property before committing.

The third step is evaluating the opportunity, which he said is where investors are most easily misled.

“People jump straight to the suburb or the glossy brochure, but if the fundamentals aren’t there such as population growth, infrastructure and rental demand, the property simply won’t perform,” he said.

Senior cited high-growth local government areas and growth corridors such as Ipswich, Logan and Moreton Bay in Southeast Queensland and Melton and Greater Geelong in Victoria as examples of markets supported by strong population growth and
infrastructure investment.

“These locations still need to be assessed property by property,” he said.

“Population growth alone does not make a good investment, but when strong population growth, infrastructure, affordability, rental demand and the right dwelling type come together, that is where new-build property can become a very powerful long-term strategy.”

The final step is scrutinising the who and what behind the property – that is, the builder, the contract and the inclusions.

“This is where the biggest risks sit in the new-build sector,” Senior said.

“You need to know the builder’s track record, their insurance limits, their pipeline of existing work and whether the contract is genuinely fixed-price and full-turnkey.

“If you don’t, you can end up with delays, cost blowouts or a property missing basic essentials.”