5 traps in
buying new
Look beyond the fresh designer appeal to make sure your dream
home doesn’t become a nightmare
T
here are many brand-new homes
on the market and, let’s face it,
for many of us, the thought of
living in a place that has not
been occupied by others and
being able to personalise its design has strong
appeal. The many types of property include
units, townhouses, duplexes and house-and-
land packages in a new estate.
But before jumping in and committing to
a new home purchase, it is important to be
aware of the pitfalls. Here are five reasons
why buying a new house-and-land property
may not pay off over the longer term.1
YOU ARE PAYING FOR SOMEONE
ELSE’S PROFIT
Property development involves a number of
steps to deliver the end product to the market.Usually from the time a site is acquired by a
developer to the time a dwelling is ready for
sale, the steps include obtaining council and
building approval, construction, marketing
and sales. Every step in this process involves
a cost and every consultant, contractor or
company engaged along the way will usually
make a profit.
This cumulative cost resulting from the
development process is built into the pur-
chase price of a new property ... engineers,
building designers, certifiers, surveyors,
builders, project marketers, sales agents and
the developer will all be making money, and
this is reflected in the listing or offer price.
These are all “hidden” costs, and they could
be equivalent to a number of years’ worth of
capital growth, which will put you behind
right from the outset.Remember, if someone is helping you pur-
chase a new property but their service is
“free”, then it is likely that they are being
paid directly by the developer. Ultimately,
this means that you are paying for their
services anyway because it will be built into
the purchase price.2
YOU ARE LIKELY TO EXPERIENCE
LOW CAPITAL GROWTH
When we look at new house-and-land proper-
ties, we generally find that these estates are on
the outskirts of the major capital cities. This is
usually where there is an abundance of land
and therefore an almost endless supply of new
housing may be possible. We also usually see with
these estates that the land is released in stages,
so that as stage 1 nears completion the stage 2
land is released, and so the pattern continues.STORY MELINDA JENNISONPROPERTY HOUSE-AND-LAND PACKAGES