Buying before it's built

​With continued pressure on housing stock Aucklanders are increasingly turning to purchasing apartments ‘off the plans’, says the city’s largest real estate agent Barfoot & Thompson.

The company’s projects division, which provides a specialised end-to-end sales service to quality residential developers, is reporting rapid growth in the popularity of buying properties ahead of completion.

“Not only are there now more quality options available for sale than in the past, more people are showing interest in this method of securing a new home,” explains Director Kiri Barfoot.

“This is particularly the case for higher-end apartment complexes in the city and fringe, backed by reputable developers.”

Taking examples from four of Auckland’s most recent apartment developments marketed by Barfoot & Thompson over the last 12 months, the company says the evidence is in the speed at which properties like this are being snapped up.

“We now typically sell between 20 and 28 per cent of all stock in a yet-to-be-built complex within the first month of the property coming to market.

“Across these projects are quality properties ranging from as little as $350,000 to multi-million dollar apartments, all in great locations in and around the city.

“These are proving attractive to a wide range of buyers including first-timers keen on a great location and more manageable mortgage, executives who want to be closer to work, and baby-boomers opting for a high-end lock-and-leave lifestyle.”

A prime example is Wynyard Central, the first residential development for the rejuvenated Wynyard Quarter. When the development broke ground in October this year after only seven months on the market, Barfoot & Thompson had already secured buyers for well over 60% of the apartments. Meanwhile its neighbour, the affluent 132 Halsey had sold nearly 80% of its multimillion dollar apartments by ground breaking.

Ms Barfoot also highlights that while the city has seen a surge in planned residential construction over the past couple years, the ‘off the plans’ trend is holding strong even in the face of greater supply. “For example, 25% of the 161 apartments available in The Antipodean have sold since listing only four weeks ago, averaging a sale per day.

Construction is yet to start on the Beach Rd development, with an occupying date currently set for March 2018.

“While buying off the plans can be daunting, it can also offer benefits well worth considering in this market,” says Ms Barfoot.

“With demand still exceeding supply in Auckland, this process allows buyers to secure a property early, while also taking advantage of time to build up their savings, or sell their existing home.”

For first home buyers in Auckland, apartments bought off the plans for under $550,000 can also meet the criteria for a KiwiSaver HomeStart grant.

Barfoot & Thompson’s guide for buyers:

• Reputable developers and agents key: Good developers and contractors are critical to a quality outcome. Do your research into all those involved and work with a licensed agent. Check out the developer's previous projects if you can.
• Get a feel for the space and finishings: Pace out plans so you are familiar with the true size of the apartment (excluding the balcony) and ask questions about the planned appliances, ceiling height, fittings and furnishings. Ideally there will be a display suite available for you to view.
• Understand the type of ownership and what it means for you: Is it unit title or fee simple, freehold or leasehold? If leasehold, consider the terms and conditions of the lease. Be aware there are also new leasehold structures emerging in the market, such as long-term leases pre-paid by the developer, where no ground rent is payable.
• Body corporate: Every owner of a flat or apartment held under a unit title automatically belongs to the body corporate and has a share of control over what goes on in the building like insurance for, and maintenance of, the common areas. It’s wise to thoroughly investigate and understand the body corporate structure and realise that the fees will increase.
• Additional costs: Understand what additional costs there may be, what they cover and what level of service is provided, including for on site management and ancillary facilities like a pool or gym which may be included or come at extra cost.
• Be clear on the process: Be sure you understand the criteria for the development to go head, what each party’s obligations are and what the potential timeline is, factoring in the required flexibility for such projects.
• Plan ahead: While you will only need to pay a deposit now, and borrow on completion, it pays to plan ahead against your likely income, the cost of borrowing and so on to avoid any surprises. Also be sure to consider the additional costs of any leases, body corporates and other fees.
• Parking: While some city dwellers ditch their car, others still opt of the convenience of a carpark. If purchasing two, be sure to check if they are side-by-side, tandem or hoist operated. Some buildings are also now offer scooter parks, and the option of shared vehicles/car shares.

 

Read more about buying off the plans.