Off-the-plan properties are off the menu for investors
Investors favour established properties over new off-the-plan builds, research has revealed.
The Mortgage Choice Investor Survey has found that 76.9% of respondents either had bought or intended to buy an existing property, versus 23.1% who favoured a new build.
The result is a slight rise on last year’s survey findings, when 75.8% of investors said that they intended to buy an existing property.
“While it's only a small rise each year, this is a trend that I expect to see continue over the coming years," Mortgage Choice chief executive John Flavell said. "I believe that we will continue to see an increasing proportion of investors choosing established dwellings over new builds.”
Flavell said that there were reasons why an investor might choose an established property over an off-the-plan build.
“Firstly, established dwellings are ready to buy and move tenants into straight away. Meanwhile, investors who purchase an off-the-plan property may have to wait several years before they can access the property and, in turn, generate income from potential tenants,” he said.
Flavell said that established homes could also be more affordable, depending on the location, and that investors also had the option of adding value through renovations.
“Lastly, we have seen a few examples where the valuation for an off-the-plan property has come back short, leaving borrowers scrambling to make up the difference. Investors are acutely aware of this and, as such, are looking at all their property options before heading down this path,” he said.
The findings come following an announcement in June that the NSW Government will axe stamp duty exemptions for off-the-plan properties.