As a foreigner I can only buy off the plan, or at least previously unoccupied property. But currently it seems that new build is selling at a premium. In Brisbane at least, comparing the prices of existing apartments with those “off the plan” the premium seems to be in the order of at least 25% and maybe even higher. One article I read suggested that the premium can be as high as 40%.
As far as I can tell the reasons for this are as follows:-
- Land prices currently high
- Construction costs currently high
- Demand from foreign investors like me because we cannot purchase an existing unit (although 50% only of the development can be sold to foreigners)
- An expectation that by the time the development is finished the resale value will have increased
- A higher rental can be achieved for a new unit
- There are lower maintenance costs on a new unit
I can’t think of any more reasons but would be interested to know if any members can think of any more.
Despite this premium I am minded to proceed with my purchase (with FIRB permission of course), but I do worry that I am making an obvious mistake. Does anyone have any views?
One of the main reasons that they are selling at this premium is because the price is controlled by the developer and marketers.
If you buy at this huge premium, you are giving away your first few years of capital growth to the developer, and it’s not his to have.
When you buy off the plan you should be buying at a discount not a premium.
You get a discount to make up for the uncertainty of the deal. The uncertainty of completion times and levels of finishes and the market conditions when you eventually settle.
There is no point in buying offfthe plan in Brisbane when there is over 2 years of stock available in newly completed projects at present.
I understand it is difficult being an overseas resident and not being able to buy established properties. You would be better buying completed but unoccupied apartments
Michael Yardney
METROPOLE PROPERTIES
Publisher of Australia’s leading property e-magazine.
Join over 17,000 readers.
FREE subscription http://www.PropertyUpdate.com.auThanks very much Michael, for giving us the benefit of your experience and knowledge.
You would be better buying completed but unoccupied apartmentsI suspect that these have remained unsold because the developer has reached the limit of 50% of sales which can be made to overseas purchasers. If so, they could only be sold to Australian permanent residents. The fact is that to UK/US/Singaporean purchasers Australian property is good value compared with what you can buy back home. However I suppose a serious US housing crash (which would probably have repercussions in the UK) and a glut of new-build might bring the premiums down.
Originally posted by jorgon:Thanks very much Michael, for giving us the benefit of your experience and knowledge.
[I suspect that these have remained unsold because the developer has reached the limit of 50% of sales which can be made to overseas purchasers.
Hi Jorgn
You are incorrect – Theer are many buildings where the limit for overseas sales has not been reached. It’s not that hard to find a new but property in Brisbane for overseas investors at present.
Our Brisbane office has bought a few in he last few months – http://www.metropoleproperties.com.au
Michael Yardney
METROPOLE PROPERTIES
Publisher of Australia’s leading property e-magazine.
Join over 17,000 readers.
FREE subscription http://www.PropertyUpdate.com.auI’ll pay the site a visit.
Originally posted by jorgon:I’ll pay the site a visit.
You should go one step further and speak to Michael about what his staff can achieve for you.
I wouldn’t hesitate for a second in recommending his team to anyone. Michael is one of the good guys in an industry that attracts fools and shonks.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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