\nWe take a look at the pros and cons of buying off the plan with\u00a0George Raptis <\/b>from Metropole Property Strategists.
\n <\/p>\nTranscript:<\/h4>\n
Kevin<\/b>:\u00a0 It\u2019s always a telling sight around Australia when you see those cranes go up. You know there\u2019s a lot of construction happening. We\u2019re certainly seeing that now in the capital cities around Australia. We take a look at the pros and cons of buying off the plan with\u00a0George Raptis from Metropole Property Strategists. Transcript: Kevin:\u00a0 It\u2019s always a telling sight around Australia when you see those cranes go up. You know there\u2019s a lot of construction…<\/p>\n","protected":false},"author":176692471,"featured_media":3828,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,25],"tags":[101],"class_list":["post-3826","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-sponsored-channels","tag-podcast"],"yoast_head":"\n
\nThere\u2019s word that there is an oversupply of units hitting the market in Melbourne. I wonder what the situation is like in Sydney. That\u2019s a bit of a landmark market for Australia. I\u2019m going to ask George Raptis from Metropole Property Strategists what he\u2019s seeing on the ground.
\nAny risk that there may be an oversupply on the way in Sydney, too, George?
\nGeorge<\/b>:\u00a0 Hi, Kevin. What we found in the Sydney market up until recently is being Australia\u2019s largest market, we have been struggling with a bit of an under supply of property actually, but there is quite a number of new apartments coming out of the ground. They\u2019re traditionally in those inner-city type locations whereby they used to be the old commercial industrial sites and now transformed into residential living.
\nKevin<\/b>:\u00a0 Yes. One of the things I notice about new unit development is by the time it starts to come out of the ground, most of them are sold through presale activity, because the banks demand that there is a certain level of presales before they\u2019ll even allow finance to go ahead.
\nLet\u2019s have a look at what might be happening in the future and what people would be aware of if they\u2019re actually going to buy off the plan, George.
\nGeorge<\/b>:\u00a0 Yes, it is. The banks do look at these type of developments very carefully. Interestingly, a lot of the major banks don\u2019t like to expose themselves too much as far as lending in these types of developments.
\nIn other words, in some cases, they like to keep to about a 15% ratio. That means if you\u2019re the 16th<\/sup> person going to the bank and want to buy in that particular development, there could be a bit of a drama.
\nKevin<\/b>:\u00a0 On what basis, George? How do they base that?
\nGeorge<\/b>:\u00a0 Especially in the developments whereby there are thousands of these things, they all look the same, they like to limit their exposure, Kevin. They don\u2019t want to expose themselves completely, because sometimes these types of developments, you need to be very wary that they are going to be the right property for the investor out there.
\nKevin<\/b>:\u00a0 What precaution should someone take if they\u2019re going to go to the bank? You don\u2019t want to get knocked back too often. It goes against you on your credit file.
\nGeorge<\/b>:\u00a0 That\u2019s right. They need to obviously be in touch with a bank who they\u2019re speaking to there, make sure that then they have all the right information with regards to the development and get the feedback from them.
\nKevin<\/b>:\u00a0 I guess a lot of these developments have their own finance people on site. Is that a better way to go, rather than deal with your own bank?
\nGeorge<\/b>:\u00a0 A lot of them try to tie everything up in a nice neat parcel and have their own finance people, have their own solicitors, that sort of thing. I\u2019m always a little bit wary of that. I like to keep a bit of an arm\u2019s length, keep someone totally independent from the transaction, someone who\u2019s going to give you honest and independent advice.
\nKevin<\/b>:\u00a0 Let\u2019s have a look now at the situation. We talked about these developments coming out of the ground, and there\u2019s obviously been a number of presales, but by the time they go to construction, there will be still a number unsold. As an investor, am I better off waiting until towards the end because there might be a bit of a clean out at the end, George?
\nGeorge<\/b>:\u00a0 It\u2019s a bit six of one, half dozen of the other, Kevin.
\nI found that in my previous life as a selling agent sometimes some people got better deals at the beginning, sometimes people got better deals at the end. It really depends on the development \u2013how popular it is, for example. They do limited releases to start with. They see how quickly they sell these properties.
\nIf they see they\u2019ve got a lot of enthusiasm in the beginning stages, what they tend to do is then uplift the prices on the remainder of the properties, so sometimes at the end, you\u2019re paying more.
\nIf it\u2019s a development where it\u2019s not as popular and they\u2019re struggling to sell in the initial stages, then what you\u2019ll find later down the track, they probably will discount. You just have to watch what you\u2019re getting yourself into.
\nKevin<\/b>:\u00a0 Even in over supplied markets, George, we see units continue to sell. What is it in one block compared to another that\u2019s going to minimize the impact of an oversupply? Are there any features that stand out that you\u2019ve seen?
\nGeorge<\/b>:\u00a0 With regards to features, I always like to look for something that\u2019s unique, something that\u2019s got a bit of a boutique feeling about it, something where they\u2019re not like rabbit warrens, where every one looks like the other one and you can\u2019t differentiate one from the other.
\nIt could be floor plan. It could be the aspect. One might have a nice city skyline view or a water view as opposed to something that\u2019s looking into another block. I\u2019m always looking at something that\u2019s got that uniqueness about it.
\nKevin<\/b>:\u00a0 What about that mix of owner occupiers compared to investors? Is that something we should be concerned about \u2013 in other words, trying to get into a block that\u2019s got more owner occupiers than investors?
\nGeorge<\/b>:\u00a0 Always a better thing to do. I don\u2019t like looking at properties where it\u2019s predominantly investor owned. Unfortunately, they don\u2019t get involved in the day-to-day runnings of the property. They don\u2019t take a lot of interest, so what happens is you have this huge flow of people moving in and out and places get knocked around a lot.
\nIf you\u2019re looking at something and it\u2019s predominantly owner-occupied \u2013 which unfortunately, in a lot of cases, a lot of these larger developments, they\u2019re not; they\u2019re mainly investor-owned \u2013 I\u2019d say a good rule is if it\u2019s mainly owner-occupied, it would go well in the future as far as it being well looked after.
\nKevin<\/b>:\u00a0 Good idea, George. George Raptis there from Metropole Property Strategists. A bit of wise advice if you\u2019re planning on buying off the plan.
\nGeorge, thanks so much for your time, mate.
\nGeorge<\/b>:\u00a0 Thank you, Kevin.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"