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Back in 2017 I put out a video talking about buying off the plan and it’s been one of the most popular videos I’ve put out to date.¬†

That tells me that there is a demand for information on buying off the plan. I think that’s in part due to the ambiguity of buying property like this.

The way they’re marketed, glossy magazines, fancy ad banners on websites; it’s almost like there’s some mystique about it. And to be fair developers & agents have become very good at marketing off the plan properties.

Over the past 7 years, I’ve financed dozens of off the plan properties for our clients; I’ve even bought off the plan myself during this period. It puts me in a unique position, I’ve seen the good, the bad, and the real ugly when it comes to buying off the plan.

And this video, you might say an opinion piece, isn’t designed to be negative, it’s about being realistic so that you don’t find yourself in a position where you’re risk at losing your deposit through factors outside of your control.

The global economy is in a very weird spot, inflation is ballooning, cost of construction has increased dramatically and interest rates have jumped. Australia is not immune to this, From May 2022 until May 2023 the RBA has increased rates on 11 occasions out of the last 12 times that the RBA has met.

The very nature of buying off the plan means you’re committing to something today, without know what tomorrow, or 12, 24 months down the track will hold when it comes time to settle on the property. And it’s this instability that leaves off the plan buyers at the most risk.

If you had of committed to an off the plan property at the start of 2022, with the build finishing at the back end of 2023, or even in to 2024 – there was no real way of knowing the future impact on your serviceability; and it’s my expectation that there will be people struggling to obtain the funding they require to complete settlement.

A single income earner, with a salary of $100,000 p.a. (ex super) was able to borrow circa $700,000 only 12 months ago. That same person, in today’s market would see their borrowing capacity reduce to a figure of circa $500,000. You can see the risk right there.

And it’s not just serviceability that poses a risk, what about employment, or the instability of the construction industry.

In a more stable market, the above concerns may soften, but that’s not the market we’re in at the moment. So think very carefully about off the plan in 2023.

It would be remiss of me to not acknowledge that this information doesn’t apply to everyone; it’s impossible to talk in absolutes when it comes to home loans and properties in Australia.

Because buying of the plan for a 65 year old retired couple, downsizing from a large free standing family home with no mortgage doesn’t need to worry about most of what I’ve discussed.

This article is targeted to those that only have smaller deposit saved, buying their first property, or maybe it’s their first foray into property investment through an off the plan property.


Keegan Rezek
Mortgage Broker & Director
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