Investing

Can I buy a retirement property with my KiwiSaver funds? Once you qualify for New Zealand Superannuation (currently at the age of 65), you also become eligible to withdraw fu...
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Is it a good idea to buy a property 'Off the Plan'?

Buying a property before it has been built has advantages and disadvantages:

Advantages of buying off the plan
  • In a rising market, real estate purchased off the plan can end up being worth much more than what you paid for it by the time construction is complete and the settlement date has arrived.
  • Where this occurs, investors can realise a substantial capital gain just days after settlement, without having invested much more than an initial deposit.
Disadvantages of buying off the plan
  • As you’re buying something that doesn’t yet exist, you can’t be 100% confident it will end up exactly as you expected it to.
  • If you’ve speculated on a quick profit and the market moves in the wrong direction during the construction period, you could be left struggling to find a buyer.  As a result, you might have to accept a significant loss.
  • Often, architects plans are amended mid-construction due to the inevitable obstacles that arise during the construction period. This could result in the finished property being different to what you signed up for.
  • It’s difficult to gauge from looking at a plan whether the quality of eventual construction will be up to the standard you expect or not.  Some builders provide show homes or show apartments that you can visit before ordering.
  • Delays in construction can upset your financial plans, and may result in money being tied up for much longer than anticipated.   Many builders have insurance to cover this eventuality, but this is not always the case.
  • It isn't common for developers to go bankrupt during apartment or building construction, but it can happen, and is therefore a risk for investors.
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