Buying new properties off plan

[Early Bird]

hi all, i have another question, hope its ok to start another thread...

does anyone have an opinion on the relative merits or otherwise of buying new builds? i'm concerned that there may be a "newness premium" like there is with cars. when you sell it it's no longer new and so has lost some of its value as soon as you buy it... and will not start to really appreciate until it overcomes this first. is that right?

on the other hand, i suppose the advantage of buying off plan is that (in a rising market at least) the property may have already appreciated from the buy price by the time you take possession of it...

hmmmm...

[MelbKate]

We bought off the plan and definitely paid a 'newness premium', which equates to about 2-3 years of capital growth. I know because we've just sold the place 2.5 years later and have barely broken even, although this doesn't bother us too much because we needed to free up equity for our home renovations, plus we've avoided CGT.

Moral of the story: if you buy off-the-plan, it's only worthwhile if it's a long term investment.

[jbocker]

Hi Early Bird
Have nearly bought off the plan once, and opted out. In retrospect glad we didnt proceed. We did it (in partnership with my daughter) to allow her an entry into the market at a future date, with a fixed price. Have seen some instances where the property price had increased to be of more value than when originally signed on, but not sure how often this happens, probably happens when the local market ramps up after you have signed on... so need to be aware of where the local 'property cycle' is. This is the reason we bailed on the 'plan' mentioned earlier, the property was tiny on a small lot and the market was red hot (Cannington Perth 07). I had purchased in Melb for around the same price and convinced my daughter to do the same. Caroline Springs big block well presented houses, new infrastructure, market flat.
We are both glad of the decisions.

All the best
JB