The advantage of buying off the plan
People can buy an established house, which is okay because you know your neighbourhood and may be close to family and friends, but there are distinct advantages to buying in a new community.
First up are some of the cost savings involved, then there’s also the new infrastructure that comes with it as well.
Currently, there’s a $20,000 first home buyers regional grant and all buyers in a new community receive a stamp duty exemption. In recent times, there’s also the $25,000 HomeBuilders grant which has been taken up by many people.
Once a buyer has selected a block where they want to live, they then generally they’ve bought in a recent stage release by a developer who will then start construction once enough sales have been made.
Generally, the construction lot titles will be completed in nine to 12 months of signing the land contract.
The timing depends on the size of the stage and myriad other factors outside the developer’s control; eg, council approval times, contractor availability, site conditions and weather interruptions.
The most difficult of all are delays due to Powercor’s audit system, which can cause unnecessary delays at the end.
Generally, a developer aims to have titles available and land ready for construction in a nine to 12-month period.
Sometimes there may be remnant stock for resale, where a buyer can buy a block with a shorter waiting period.
The wait during the construction period is advantageous to most buyers.
It gives them the opportunity to save more deposit for the land and building so they have more equity for their finance application. It’s a saving period, they might be able to save another $10,000.
This is advantageous because the more cash they save toward their loan deposit, the more they can avoid or minimise the cost of mortgage insurance.
During this time, they can also choose their builder and fine-tune their design and interior decorating choices.
In many cases, they can do some quick renovations to their existing home, if they have one, to maximise the return on its sale. First home buyers living at home with their parents can save even faster because they may be paying minimal or no rent.
As for delays, the developer makes their best endeavour for titling but sometimes things are outside our control. It’s delays in support, particularly by Powercor, that hold up the work.