May 13 2013, 07:57 PM
QUOTE(divine061 @ Apr 12 2013, 10:22 AM)
Let me just stop you right there and just STOP AND FORGET about this idea IMMEDIATELY. Just do a simple google on off the plan property purchase in Australia and you'll find hundreds of reasons why you shouldn't do it. But in a nutshell, this is what you need to know.
1) Foreigners buying in Australia are only allowed to buy new properties, i.e. off-the-plan properties.
2) Developers are selling off the plan properties at a future price, i.e. the price at the estimated completion date, not the current price. Which means you are doomed to lose money when you buy an off the plan properties. Just google and see cases of people not being able to even secure loans after the building is completed. I.e. you bought the unit for $600k and at completion, the bank value it at only $550k, and you'll need to scramble for the $50k gap.
3) If the development does get completed (That is a big if as A LOT of big developer goes busted half way and you have no way to claim your money back), you see a lot of cases where the finishing is different from the actual spec, i.e. the floor space is smaller, ceiling height is lower, floor plan get changed etc.
4) Because of point 1, the off the plan market is different from the REAL Australian market. In one sentence, it is the inflated Chinese market, and a lot of them just need a channel to siphon the money out of China so price is secondary concern.
5) Due to point 2 and 3, you'll see a lot of people selling at completion, and it is sold urgently at a lesser price.
There are obviously exceptions and it is still possible to find good purchases. But if you are not familiar with the market, it is a pure speculation with very very high risk. So again, STOP NOW!!
1. There are lots of rules here, but foreigners are not restricted to just off-the-plan properties, depending on use and whether it will be rented.1) Foreigners buying in Australia are only allowed to buy new properties, i.e. off-the-plan properties.
2) Developers are selling off the plan properties at a future price, i.e. the price at the estimated completion date, not the current price. Which means you are doomed to lose money when you buy an off the plan properties. Just google and see cases of people not being able to even secure loans after the building is completed. I.e. you bought the unit for $600k and at completion, the bank value it at only $550k, and you'll need to scramble for the $50k gap.
3) If the development does get completed (That is a big if as A LOT of big developer goes busted half way and you have no way to claim your money back), you see a lot of cases where the finishing is different from the actual spec, i.e. the floor space is smaller, ceiling height is lower, floor plan get changed etc.
4) Because of point 1, the off the plan market is different from the REAL Australian market. In one sentence, it is the inflated Chinese market, and a lot of them just need a channel to siphon the money out of China so price is secondary concern.
5) Due to point 2 and 3, you'll see a lot of people selling at completion, and it is sold urgently at a lesser price.
There are obviously exceptions and it is still possible to find good purchases. But if you are not familiar with the market, it is a pure speculation with very very high risk. So again, STOP NOW!!
2. That is possible, but the ones I've recently looked at was on par with completed ones. Depends on your luck, if the market drops after you had bought, then you will be under water, but that's not the fault of the developer.
3. Developers must be able to sell x% off-the-plan before the bank will finance the project. This basically safeguard the project. As for variations in the final product, the developer is allowed some variations and this will be written in the contract.
4. Don't think Australian properties are being bought only by the Chinese.
5. There are very few flippers here. Most buy for investment or for own use.
Agents charge between 8 to 9% (+10% GST) of rent as management fees. They will also charge 2 weeks rent as leasing fee, then charge $100 or so for inspection, etc. Any maintenance issues, they will organise (usually their own contacts) to attend, and this can sometimes be expensive. All these fees will make a dent to your gross rent :-( and of course final yield. At present due to tight rental conditions, this is bearable as the rental income is high. This is also helping as capital appreciation is not that fantastic. With the interest rates dropping, I can see first home buyers market hotting up. Not so the rest of the market.
My two cents worth...
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