Understanding New Property Risks Before You Buy
In this blog we talk through five traps to be aware of when buying New Property.
There are so many brand-new designer homes now selling around Australia and let’s face it, for many of us, the thought of living in a property that has not been lived in by others, or being able to personalise the design of your own home, really does appeal. As consumers, we can choose from many different types of new properties, including units, townhouses, duplexes or house and land packages in new estates.
With Government incentives encouraging buyers to purchase new, it can be an attractive option for many. But it is also important to understand the new property risks before committing to a purchase, which is why many people turn to our Brisbane buyers agent services for guidance.
Here are five reasons why buying a brand-new house and land package may not pay off over the longer term.
Trap 1: When Buying New Property, You Are Paying for Someone Else’s Profit
The property development process includes land acquisition, planning, approvals, subdivision, construction, marketing and sales. Every consultant, contractor or company involved makes a profit along the way.
This cumulative cost is built into the purchase price of a new property, which often means you are paying years of future capital growth upfront. Town planners, engineers, project marketers, sales agents and developers all add to these hidden costs.
If someone is helping you buy new property “for free,” they are usually being paid by the developer, meaning the cost is built into the price anyway.
Trap 2: New Property Often Experiences Low Capital Growth
New estates are commonly located on the outskirts of major cities where there is an abundance of land and an almost endless supply of new housing. Land is released in stages, so as Stage 1 sells out, Stage 2 is released at similar prices.
The issue is that the building component depreciates faster than the land appreciates. Investors may claim depreciation benefits, but home buyers cannot.
When Stage 2 is sold at the same price as Stage 1, the earlier homes instantly become “second-hand.” Buyers often prefer brand-new homes, especially investors who want full depreciation benefits. This reduces demand for the earlier-built homes and affects capital growth.
Trap 3: Quality of Finishes May Not Match Expectations in New Property Builds
Display homes often include superior finishes and many “extras” that are not part of the standard inclusions in new house and land packages. Buyers can misunderstand what is actually included, sometimes even basic features like driveways or fencing are additional costs.
Buying new property also does not remove the risk of defects. It’s essential to conduct due diligence on the builder and review the contract professionally to avoid unexpected issues and ongoing repairs.
Trap 4: You Have Little Control Over the Future Neighbourhood
A common oversight when buying new property is the uncertainty surrounding the future neighbourhood. Your outlook or privacy may change once nearby construction begins.
You also can’t predict the style or quality of neighbouring homes, as none may exist at the time of purchase. In established suburbs, buyers can assess the street’s appeal, but new estates remove this advantage.
There is also no way to know the demographic profile of future residents, whether the area will be primarily owner-occupiers or tenants, which can influence long-term enjoyment and capital growth. This is why many buyers explore our Brisbane suburb profiles to better understand the characteristics of each area before committing.
Trap 5: Buying New Property Can Increase the Risk of Settlement Default
The value of new property can decrease between signing the contract and settlement, especially in markets where prices soften. If the valuation comes in lower at settlement, buyers may face a shortfall in funds.
This creates a risk of settlement default, forcing buyers to scramble for cash unexpectedly. Having a financial buffer is critical when purchasing new property, especially when the construction period spans many months.
Stay Smart and Informed When Buying New Property
New property can be appealing, but understanding these new property risks allows you to make better decisions. If you are unsure whether a property suits your long term financial goals, having professional guidance can make the process clearer and safer.
If you would like support in integrating these considerations into your buying strategy, our expert buyer’s agent team is ready to assist. You can also reach out through our contact page for personalised advice.
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