New build caution: off-the-plan may be on the nose
Unknown and untested property developers are sending a wave of caution through the property market. Buyers are being told to proceed with care.
TOP real estate experts are warning first-home buyers should be cautious about buying apartments off-the-plan.
They’re concerned that high construction costs and reduced margins could tempt some developers and builders into cutting corners.
“Everyone’s a bit spooked by what’s been happening in some of the construction issues with newer apartments,” property guru John McGrath tells Australian Conveyancer’s latest Settlement Day podcast.
“We’re finding that buyers, especially if the developers are untested, without a track record, they’re a little bit nervous and hesitant.”
Fellow panellist, top property lawyer Jared Zak of Dott & Crossitt, agrees.
“We generally try and advise first time home buyers against off-the-plan,” Zak said.
“It’s just because of that uncertainty of the build. Over the last 10 years, workmanship has not been great.
“I’m talking probably more in Sydney. Defects have been notorious. Delays have been very frequent.”
McGrath likes older buildings that have stood the test of time: say, a 12-unit walk-up from the 1960s or 70s.
“They don’t have high body corporate fees, which is becoming an issue now,” he said.
“Once upon a time, no one really talked much about fees, but with the high cost of living now, that is every second person I’m talking to.
“They say, that’s $1,500 a quarter, and I don’t think I can afford those extra fees.”
Zak says Dott & Crossitt uses a “traffic light” rating when reviewing off-the-plan contracts.
“Sort of green, orange and red,” he said. “At the moment we cannot give any off-the-plan transaction higher than orange.”
View the full podcast here:
