There’s no right or wrong choice in real estate, or “better” or “worse”. What works for one buyer may not suit another. Off-the-plan homes are a growing trend for first home buyers, but they come with unique pros and cons. Before deciding to go off-the-plan, it’s worth understanding their history, popularity, risks, and whether they align with your goals.

This article won’t tell you what to do. Instead, we’ll give you key information to help you make an informed decision – o ne that’s appropriate for your specific situation. Now, let’s get into it.

The history of off-the-plan homes

Off-the-plan buying emerged in Australia during the property boom of the late 20th century. It became a way for developers to fund large projects before construction started. By selling units early, they secured the financial backing needed to complete the build.

Initially, off-the-plan purchases were limited to city apartment blocks, catering to urban professionals wanting a modern home close to work. Developers used this approach to market newly designed, high-density living spaces in areas with growing demand.

During the 1990s and early 2000s, government support began to play a role. Programs like the First Home Owner Grant made off-the-plan buying more accessible. Many first home buyers were drawn to the opportunity to secure a new home with potential savings on stamp duty.

The concept expanded beyond apartments as urban sprawl increased. New housing estates on the outskirts of cities began offering off-the-plan homes, providing a mix of affordability and customisation for buyers willing to wait for construction.

Over time, technological advancements changed the way off-the-plan properties were marketed. Buyers could explore virtual tours, detailed floor plans, and artist impressions, giving them a clearer idea of what to expect.

Today, off-the-plan homes are a key part of Australia’s property market. They offer flexibility and the chance to lock in a property at today’s price, even if the market rises before completion. As urban centres grow and housing demands evolve, this option continues to appeal to a wide range of buyers.

Growing trend of off-the-plan homes

Off-the-plan homes are becoming a popular choice for Australian buyers, especially in urban areas. Data highlights their increasing demand:

• The average annual growth of off-the-plan sales has been around 20% each year over the past 15 years.
• Approximately 31% of Australian homebuyers prefer building new homes or buying off-the-plan over purchasing existing properties.
• On average, off-the-plan sales represent around 6% (and in some years, 10%) of all residential property sales in New South Wales.

Even with the market growth, the challenges of off-the-plan purchases are also reflected in the data :

• In Sydney, 62% of off-the-plan apartments were worth less at settlement than they were at exchange.
• In Melbourne, 46% of off-the-plan properties settled with a price below their contract value.

These statistics highlight the significant and growing interest in off-the-plan and newly built homes in Australia, despite some challenges in certain markets.

Why off-the-plan homes have become a popular choice

Off-the-plan homes offer unique benefits that attract many buyers, especially first home buyers . Here’s why:

• Government support : Programs like the First Home Owner Grant have encouraged many buyers to consider this type of purchase.
• Potential cost savings : Some buyers are drawn to stamp duty savings available on off-the-plan properties in certain Australian states.
• Modern designs : Off-the-plan homes often feature contemporary layouts, energy-efficient appliances, and modern amenities, appealing to buyers wanting a fresh, new property.
• Customisation : Buyers can sometimes choose finishes, fixtures, or layouts, giving their home a personalised touch before it’s built.
• Time to save : As mentioned, the waiting period during construction can give buyers extra time to save for their loan or other costs.
• Fixed price agreements : Buyers can secure their property at today’s prices, potentially avoiding increases in a rising market.

These features have made off-the-plan homes a practical option for many, especially buyers entering the property market for the first time.

The risks of buying off-the-plan homes

While off-the-plan homes offer potential benefits, they also come with risks that buyers should carefully consider.

• Construction delays : Projects can take longer than expected, causing stress or complications for buyers with strict timelines.
• Changes in property value : Market conditions can shift during construction. Your property’s value may decrease before settlement, affecting your financial position.
• Quality concerns : The finished home might not meet expectations. Materials, workmanship, or layouts could differ from plans or marketing materials.
• Developer reliability : If the developer faces financial issues, the project might stall, leaving buyers uncertain about their purchase.
• Limited inspection opportunities : You can’t physically inspect the property before buying, relying instead on plans, impressions, or virtual tools.
• Financial challenges at settlement : A higher-than-expected final price or unforeseen costs can impact loan approvals or budgeting.

These risks highlight the importance of thorough research and understanding all terms before committing to an off-the-plan purchase.

Case study: When things go wrong with off-the-plan homes

Let’s look at a fictional scenario where things might not go as planned when buying off-the-plan.

Amara, a first home buyer, decided to purchase an off-the-plan apartment in an exciting new complex. The development promised modern features, a convenient location near public transport, and eligibility for first home buyer government support .

Amara signed the contract and eagerly awaited her home’s completion, originally scheduled for 18 months later. However, delays soon followed. The developer cited supply chain issues, pushing the completion date back another year. Amara, who was renting, had to extend her lease and adjust her moving plans multiple times.

When the apartment was finally ready, Amara noticed several changes. The flooring material wasn’t what she had chosen, and the balcony was smaller than the original floor plan indicated. Her excitement turned to frustration when the developer barely responded to her requests to address these differences.

Compounding the issue, the local property market had softened during the delay. The apartment’s valuation came in lower than the agreed purchase price, which impacted her lender’s assessment. Amara was asked to pay a larger deposit to finalise her loan.

Despite these challenges, Amara moved in and began her journey as a homeowner. While the property met her basic needs, the experience left her feeling wary of the unexpected hurdles associated with off-the-plan buying.

This case shows how changes, delays, and market fluctuations can create stress for off-the-plan home buyers. Understanding potential risks is key to making an informed choice.

Disclaimer : This case study illustrates potential risks and challenges some buyers may face. However, it doesn’t reflect every off-the-plan purchase. Many buyers have positive experiences and encounter no significant issues. Each situation depends on factors such as the developer’s reliability, market conditions, and the property itself.

Questions to ask before buying off-the-plan

Before committing to an off-the-plan home, ask these key questions to ensure it’s suitable for your goals and circumstances:

• Can I afford potential delays? Construction delays happen. Consider whether waiting longer than planned could affect your finances or living situation.
• Do I understand the contract? Off-the-plan contracts can be complex. Make sure you know what’s included, timelines, and what happens if issues arise.
• What’s the developer’s reputation? Research the developer’s track record. Have they delivered quality projects on time in the past?
• How could market changes affect me? Property values can shift before settlement. Think about how this might impact your loan approval or future finances.
• What choices do I have for customisation? Understand what personalisation options are available and how much flexibility you’ll have in the design or finishes.
• Am I eligible for incentives? Check if you qualify for any government grants or schemes (like the First Home Super Saver ) to reduce costs or make the purchase more affordable.
• What’s my backup plan? If challenges arise, such as valuation issues or unexpected costs, consider how you’ll handle them.

Answering these questions can help you feel more confident and prepared when deciding if an off-the-plan home is right for you.

Key takeaways for buying off-the-plan

Off-the-plan homes can offer exciting opportunities, but they aren’t without risks. Whether they’re right for you depends on your goals, finances, and comfort with uncertainty.

Understanding their history, benefits, and challenges helps you make a choice that aligns with your needs. The key is to stay informed and realistic. Take the time to research thoroughly, ask the right questions, and consider how this type of purchase fits into your long-term plans.

Every property decision is deeply personal. What works for someone else might not work for you, and that’s okay. Choose what feels right based on your unique situation.