Buying an off-the-plan property is an attractive option for many investors in Melbourne. With potential stamp duty savings, lower upfront costs, and the opportunity to secure a property at today’s prices, it’s easy to see the appeal. But is an off-the-plan investment property in Melbourne a good idea? Let’s explore the key benefits, risks, and how to make the right choice for your investment strategy.
An off-the-plan property is one that is purchased before or during its construction phase, based on architectural plans and renders. This could be an apartment in a high-rise development, a townhouse in a boutique project, or a house-and-land package. Investors commit to the purchase before the property is completed, with settlement occurring once construction is finished.
One of the biggest advantages of buying off-the-plan is the potential stamp duty concession. According to the State Revenue Office Victoria, “When the off-the-plan concession applies, the dutiable value is the contract price minus the construction or refurbishment costs incurred on or after the contract date.” This can lead to significant savings for investors.
2. Lower Initial Costs
Unlike established properties, where full payment is required upon purchase, off-the-plan investments typically require only a 10% deposit upfront. The remaining balance is paid upon settlement, giving investors more time to arrange financing and prepare for ownership.
Newly built properties are attractive to tenants because they offer modern designs, energy-efficient features, and lower maintenance costs. A well-presented property can attract quality tenants and reduce vacancy periods.
When buying off-the-plan, investors secure a property at today’s market price. If the property market appreciates by the time of settlement, the investor benefits from capital growth without having to pay additional costs.
Off-the-plan properties allow investors to claim higher tax deductions through depreciation. Items like new appliances, fixtures, and fittings can provide substantial tax benefits, making the investment more cost-effective.
While off-the-plan investments have many advantages, there are risks to consider.
Property prices can rise or fall between the time you sign the contract and when settlement occurs. Researching high-growth areas with strong demand can help mitigate this risk.
Delays can push back the settlement date, which may impact financing arrangements. Choosing reputable developers with a solid track record reduces this risk.
Lenders may reassess the value of the property at settlement, and if the market has declined, they may offer a lower loan amount. Securing pre-approval and having a financial buffer can help manage this.
Selecting the right project is key to ensuring strong rental demand and capital growth. Consider the following factors:
At BISE Property, we specialise in helping investors secure high-performing off-the-plan opportunities. Our team provides:
So, is an off-the-plan investment property in Melbourne a good idea? With the right research, developer, and location, buying off-the-plan can be a smart investment strategy. However, it’s essential to be aware of potential risks and take steps to mitigate them.
If you’re looking for expert guidance on selecting the best off-the-plan opportunities, contact BISE Property today.
