The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
NOVAK NEWS - OFF THE PLAN - is it ON your radar??
Unlock the secrets to making a smart investment in the real estate world by mastering the art of off-the-plan property buying. We promise to guide you through the bustling marketplace with insights that could turn your next property purchase into a strategic move. As the year winds down, discover why now might be the perfect time to secure your new home before the holiday rush. With interest rates on the brink of decline and the demand for modern apartments soaring, we weigh the benefits against the common concerns of paying a premium and the quality of new builds, ensuring you make an informed decision.
Join us as we unravel the intricacies of purchasing off-the-plan properties, highlighting the importance of consumer protection and the advantages of working with reputable developers like Landmark. We share practical tips on inspecting previous projects to ensure quality, address common questions about property availability, and explore customization options during early construction stages. Our team at Novak Properties is committed to assisting you through every step of the process, offering a diverse portfolio that includes apartments, townhouses, and land across various locations. Tune in for a comprehensive look at the real estate expertise we provide and empower yourself with the knowledge to navigate the off-the-plan journey confidently.
Guys, 8pm. You know what that means. It's Monday night. It's Novak News. Stevan Bublo, billy Drury, join us tonight for a hot topic of Off the Plan. Ladies, gentlemen, thank you, thanks for joining us. Good evening Stevs, good to see you, billy. And tonight's hot topic, something to talk about, is obviously. I mean, we're close to closing out the year. I don't know if I'm allowed to say that on camera, with Mark not getting angry at me, but we are getting close towards the end of the calendar year and, billy, from where I've been sitting the last few weeks, there seems to be a lot of momentum in the marketplace. Yeah, it's been busy.
Speaker 2:I'm just going to put a little banner on the bottom here. See, if you do, it has been busy. Buyers at the moment, if they've got the capacity to for the next week or two, are still pushing for settlements before, yeah, christmas. I'm finding that's like majority preference. If they've sold or if they've got an intention to move in, they want to be basically in their new place for christmas. Yeah, um, I think long settlements will start as of like the next fortnight because the gap just gets too tight and solicitors and brokers go on to like skeleton staff um, and through that holiday break they generally then push the settlements out to over the next side of new year.
Speaker 1:But, yeah, there's like a definitely a final push, everything's moving, everything's selling and there's a lot of interest in the market. I think I wouldn't I wouldn't go as far as to say that there's a boom going on in regards to pricing, but in regards to transaction rate and properties coming on and off the market, it's pretty consistent which then? Leads us to the topic tonight off the plan. Is that something? Firstly, is it a good time to consider it? Have you considered it?
Speaker 1:What are the benefits, what are the negatives to off the plan purchasing? Now, it's something that DY has seen quite extensively, I will say, in the last probably 10 years and even more so maybe in the last five years. There are some hot spots that will be coming up still across the northern beaches, but let's talk about it with you tonight.
Speaker 2:Yeah, I love this topic because I'm finding buyers at the moment are really caught in the midst of two different price points when it comes to the apartment stock. They either go for real premium apartment or an entry-level home that's around the $1.8 million range for the beaches or they're caught in this crossover between a newer apartment built in the last 5, 10 or 15 years or something that's like 50 or 60 years old yeah, 10 or 15 years, or something that's like what? 50 or 60 years old? Yeah, yes. And so the brand new of the plan stuff is, in my opinion, renting better. These days, people are paying more for accommodation because they're at home, or they were, you know, working from home. You know they're enjoying the nice, you know the luxuries, I guess, of modern appliances and ducted air con heating, things like that. But buyers are still a little bit on edge about new buildings.
Speaker 1:Look, they always are, and I think that's driven a lot by the media. How many times do you hear somebody say is it going to collapse? Like as if every second building that's been built has collapsed? There was that one out that, I think around Olympic Park somewhere. That was an absolute catastrophe.
Speaker 1:know, really, yeah, um and apparently that now applies to everything, with some buyers, um, but we're going to talk this year. I'll talk through some of the benefits, um, and and some of the I won't say negatives, but but some of the downsides, I guess, to looking it off the plan. And when I say benefits wise, particularly in the market where we are today, with a lot of a, a lot of news coming out that interest rates are hopefully going to be on the decline next year generally a reduction in rates will look to see a boost in property prices.
Speaker 1:So what you want to do if you're buying off the plan, first and foremost is pay today's prices and take benefit off the back of a growing market, and the indicators in the marketplace are suggesting that that could be around the corner next year. In the marketplace are suggesting that that could be around the corner next year. In the next 12 to 14 months you're probably going to see an upward swing in property pricing, so timing really really good for that. The other thing with off the plan is that you may not have all your funds ready to go right now. You've got the capacity to put down generally a 10% deposits required or a five, and you can put more money away while the project's been completed. Generally, 18 months to 24 months is a reasonable timeframe for an off-the-plan project.
Speaker 1:And then you're going to get a brand-new property. Like Billy said, it's going to be very appealing to leasing and rental in the rental market. Brand-new, ready to go, and then, as an investor, being brand new, you're opening yourself up to depreciation and some other tax benefits as well with Off the Plan At the same time when you're going through properties as a buyer.
Speaker 1:It's frustrating when there are multiple buyers, everybody's fighting, everybody's bidding against themselves. To buy a property Off the Plan might give you five options where you can just pick one. It's a little bit less. You know stress involved at times, you know, with those properties too, yeah, well said.
Speaker 2:The number one question I get asked from buyers about off the plan steps is am I paying a premium Like? Am I paying more than market value being brand new? Yeah, so generally look.
Speaker 1:Developers have got price points that they're working towards, but the market dictates market value as well. So a developer understands that he cannot ask an absolute premium that is out of line with what the market dictates market value as well. So a developer understands that he cannot ask an absolute premium that is out of line with what the market is. Out there. Typically I will say, off-the-plan prices are maybe more so towards the top end. But I'll say I've never seen somebody lose money on a property that they bought off the plan.
Speaker 1:It's just so rare that by the time that property's finished and built that you've lost money on the Northern Beaches anyway. That you know generally, even if you are paying more today, you're still going to be making. You know, a lot of money between now and then.
Speaker 2:Yeah, and like another good thing to investigate as a buyer if you're looking into any project. That you can't move into straight away is where exactly is the pricing set in the broader scheme of the project there's?
Speaker 2:generally three sets of pricing. There's your brand new sales, which are the first sales, like state one release, that's before the building's being started to build. Generally it's in the demolition stage and the developers incentivizing buyers to basically put the deposit down and get the best price early on as they're trying to secure pre-sales. Stage two is once the building's being topped out, so concrete slabs are down, you start to get an idea of the cold shell, how the building looks from the outside. And then stage three is pretty much market value price when you're moving in.
Speaker 1:And what I'll add to that, Billy, is always motivation, changes with within the developers and and their planning throughout these stages as well. So stage one where it's really you know it could even be a pre da purchase very, very early stages the developers really trying to. He's trying to secure contracts because he's got a quota, essentially that he needs to show his lender that we've done X amount in pre-sales. We're ticking all the boxes and then the bank's going to say look, it's looking great, here's the money. Go and finish the rest of the project. And during those early stages you won't typically find that you will get a break in how much of a deposit you put down, but you do tend to negotiate the better buying prices in there.
Speaker 1:So that's something to consider in those early stages. And by the time it gets to the end stage, like you were saying, billy, where it's close to completion, generally the pressure is off the developer financially and he can usually ask a premium, and that's why you'll see sometimes two or three apartments sitting at the end of a project, because it's just cream on top, dare I say, for the developer, yeah, and he's not in a position where he needs to sell those.
Speaker 2:Yeah for sure. Guys, this is a live show, by the way, so if you've got questions or little comments, please add them in. We'd love to hear your input here. Chad from.
Speaker 1:London. Probably a good morning to you.
Speaker 2:Off the plan I sell here in London's massive IC in Oz. There's a bit more need to be done on consumer protection, both pre and post-completion. Yeah, there's certain developers that we are now working with one that's moved into DY Landmark and they've actually gone above and beyond what's required as a minimum for basically the buyer's protection. So there's post completion, like an aftercare team, and then there's a pre construction care team as well. Minimum minimum builders warranty on these new builds seven years, six or seven years, but you know there's reputable tier one builders like landmark extending that out to a 10-year warranty. Yeah, yeah, and I think also not just focusing on one builder.
Speaker 1:But Landmark we can use as a perfect example because they're right across the road from us here in DY. But if I'm a buyer and this is the first time I'm looking at something off the plan I would always tell my purchases, go out and research what that developer's done in the past.
Speaker 1:Drive by the buildings that he built two, three, four years ago. See what they're like, have a look. If there's a number of properties, you know flooding the market straight away off because there might be concerns over quality. If there are open homes in those buildings that they've built, jump through, have a look. You know it's going to give you a little bit of an idea as to what the quality and what the product is that those developers are delivering in the public space. So that's a high recommendation that I give is definitely research the builders. Landmark, for instance, is a developer right across the road. They've just completed a building. It's fantastic.
Speaker 1:The pre-sales have been really sorry. The after sales have been really strong and now they're delivering a project directly next door. So good for buyers be able to see hey, there's the end product right next to me.
Speaker 2:It looks good yeah, if you want to chart your projected growth with, you know a very unemotional um, you know measure, look at the, look at the pre-sales and the after sales and work out the average. Yeah, um, in in one particular building, you know we're talking about all of the money, yeah, and it out the average In one particular building. We're talking about all of the money and it's the same kind of stock. Another question I get Stetson I think Lisa's kind of mistyped it a little here, but I certainly know what she's talking about. Do the developers leave the worst stock to last, or is it a coincidence the remaining properties are the worst ones?
Speaker 1:Not always. I don't know, Lisa, you might have your own input on this but typically not. It's good for them. If they're smart, they'll offer a mix of properties at all different stages. Typically they don't unleash their premium properties right at stage one. Typically you'll be picking those up in a stage two release and, if they are available at stage three, you'll probably be paying a premium. But going back to what Lisa mentioned, it could also be the fact that a lot of the good property is being snapped up already and all that's left is not necessarily bad property, but something that may not have as good a view or as good natural light, or maybe is on the roadside, something like that.
Speaker 1:So yeah, I'd recommend don't wait till the end either, if you're looking at off the plan.
Speaker 2:Yeah, anticipate that you know a family or a friend member might get involved with the project and you secure one for themselves. And if they don't, you know, buy certain cutoff, they release that stock. So it's considered like the developers apartment, you know, gets thrown into the mix, which is cool. Yeah, I've also seen, you know, as you said, the the developer expecting to hold their kind of cream at the top as long as possible and that stock then gets released at the end. So you know at least, as you can, within reason, request some amendments to things like that.
Speaker 1:Yeah, yeah, definitely, look, it's a good point again from Lisa. Sometimes we'll see, you know, purchases come in and they might ask for a developer to deliver extra storage or an island to the kitchen or a modification to the kitchen, and they can sometimes deliver that during the early stages because the trades that they'll be having doing those jobs have not been on site yet. So it is a good time to try to customise the property if that's something you're looking for out there.
Speaker 2:Yep absolutely Chad. Yes, price and growth, buyers can definitely make great money by the time the property is finished. Guys, you've got to remember you're putting down your deposit and there's no other interest repayments or mortgage associated with the property until it's settled. The banks also won't do a valuation until it's settled.
Speaker 1:Yeah, and that's sorry, billy, I was going to say that's looking at a few areas of concern. Or something of consideration I would have as a buyer is, firstly, when will the project be finished? It's something that you typically want to know, but also be mindful that you may be assessed today on what your pre-approval can be, on what you can borrow the plan come the end completion date you will be reassessed to service the loan or the mortgage that you're going to be taking out on the property.
Speaker 1:If you're in that position, which most of us will be, so don't go out and buy yourself a brand new flash car two days before settlement because the bank oh, we might have dropped out billy. I don't know. The bank may or may not give you the money. So just be mindful, you will be reassessed prior to completion with your lending criteria.
Speaker 2:But in summary, I think it's great. There's certainly opportunity there. I think don't be so reliant on the property going up in value. Don't buy it because it's just brand new. I think. Buy it for its finished product that you can get familiar with, you know, through looking at other apartments, and if it works to your timeline, that's where some of the best results happen, go for it, and I find also a lot of buyers.
Speaker 1:This isn't for everyone, I don't. It could be, it should be, but most people are quite cautious with proceeding onto something that they cannot see, and for that reason alone, you won't be competing with the entire marketplace when you're buying this property, but once it's built and that's back on the market as a resale, you will be competing with the marketplace and you'll pay more for it.
Speaker 2:So I think there's a lot of benefits to it.
Speaker 1:You want to do your research. There's been improved consumer protection out there now, state government initiatives to make sure that developers are delivering the right products. But yeah, research it. And I think right now is probably a good time to be considering it, because if indicators next year are, correct. I think we'll see a bit of a growth run or market run.
Speaker 2:And another thing before I leave you. This is open to first-home buyers as well. People assume that new stock it's not built yet you can't get the first home buyer assistance schemes and the incentives you can. So there's a $10,000 government rebate for brand new stock and under $800,000, you don't pay any stamp duty. So if you need any help there, obviously you can speak with your broker, you can speak with your solicitor. They can tell you exactly what you're eligible for.
Speaker 2:But yeah, start having a look at some of these assistance schemes, yeah, yeah, makes sense.
Speaker 1:Just yeah, guys. If you have questions about it, billy and I are always available. The team here at Novak Properties, you know, always available. We've got a wide range of experience, from apartments to townhouses, to land, to everything, so we can really help you through these steps. As always, you know, we're here.
Speaker 2:And we've got properties everywhere. We're selling off the plant up in Queensland, out west DY, you name it. We've got something. We've got something for you.
Speaker 1:There you go, amazing Ladies, and got something for you. There you go, amazing Ladies and gentlemen. Thank you. Thanks for joining us, billy. Good to spend the Monday night with you here too.
Speaker 2:Thanks, Dave Cheers.