Buying off the plans now might be wise: Dunn
Now is a good time to buy properties off the plans, says Martin Dunn, of Auckland real estate agency City Sales.
Monday, March 3rd 2014, 12:00AM
by The Landlord
He said the risks associated with such a purchase were outweighed from time to time by the benefits. Now was such a time, he said.
“I believe the Auckland residential market is in a long-term growth phase that will be slightly tempered in the coming two years by interest rate rises and political intrigue. But the growth will continue relentlessly and the technical manpower to build for this growth is hopelessly inadequate. We don’t possess the trade skills and personnel to cope with the Christchurch rebuild let alone provide for Auckland’s growth.”
He said people could make money by purchasing properties off the plans now.
“I predict a steady continued growth in Auckland residential real estate and gearing into this market with as little as a 10% deposit in a rising market might put you in very good stead come settlement time.”
But he said people needed to understand the commitment they were making.
“When you sign that contract to buy something that does not exist, you are effectively contracting to the developer’s bank that on completion you will pay the $485,000 or whatever you’ve agreed to – and you can’t change your mind. You can get your lawyer to okay the documents by buying conditionally for say five days, which we generally suggest is prudent, but then you’re locked in,” he said.
“No matter how friendly or approachable the developer is, don’t be lulled into a false sense of comfort. Your agreement will be immediately passed out of his hands to his bankers and if your personal situation goes pear shaped for whatever reason in the 12 to 18 months it takes to build your new suite, it is the bank you will be speaking to, not your friendly developer.”
Buyers should ask what would happen to their deposits if a development didn’t go ahead, where the deposit was held, and whether the price was justifiable compared to existing apartments, he said.
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