Melbourne Buyers Guide
Caught in the confusion of buying property in Melbourne? The rules are different in Melbourne than in other parts of the Australia! For the inexperienced purchaser some of the differences may be confusing, however, we can guarantee that if you do your homework and keep this guide handy, the process will flow much more smoothly. Our job at NOVA Core Group is to help you determine which type of property is suitable for you, to assist in neighbourhood selection, to educate you regarding real estate prices, and to pair you with the agent that best matches your style and preferences.
Melbourne is a city contained mainly of apartments, townhouses and private homes. The most important part is understanding the difference between the types of real-estate you will find in Melbourne.
- They have individual owners (which can be personal or different business structures)
- Prices are generally more attractive as the land, foundations, walls, excavations & many other aspects are shared between the apartments
- Buildings may have shared facility (such as pool, gym, conference room, BBQ area, parking) which provide more effective living and less maintenance
- Buildings can have mixed use (residential apartments – long term stay, service apartments – short term stay, commercial-retail areas) which increases community connection in area
- The quality of the services and the security of building are kept at high standards – managed by Owners Corporation
- Each Owners Corporation has its own rules, and they should be examined if a potential owner intends to purchase
- They are individually owned
- They often have small yards that belong to each home which is usually fenced
- Residents are only responsible for their own area of yard for mowing and maintenance
- They have larger common areas such as walkways, designated parking space or garages
- They may have featured amenities such as pool, BBQ area or other recreation areas.
- There is no common hallway or elevators, hence why they have more privacy and they are quieter then apartments
- Construction elements such as walls and foundations are shared which results in lover cost then single family homes
- They may or may not have Owners Corporation
- They are individually owned
- They are unattached houses with a yard, a garage, a private garden or a swimming pool
- Owner is responsible for all expenses and maintenance of the property
- They don’t have upstairs and downstairs neighbours, no shared walls or floors, giving reasonable expectation of privacy
- They are usually higher in prices
Purchasing off-plan property means investing before a structure has been constructed. This is an opportunity to invest in future developments.
Advantages off-plan purchase:
- A purchaser can invest only a small deposit and finance the remainder of the investment on completion
- The purchaser can pay a deposit by either Bank Guarantee or Cash
- The property is purchased based on building plans and specifications
- Purchasers have a better opportunity to purchase the best unit at earliest stage
- In a rising market and development construction of more than 12 months and up to few years, there may be an opportunity for capital growth before the completion of the development
- Strong knowledge of the local market and future infrastructure, purchasing off- plan may mean purchasing at discount price before the completed project hits the market
Disadvantage of buying off-plan:
Buying a property off-plan incurs more risks then buying an existing property.
- Property market can start to decrease before construction is completed, the purchaser is obligated to buy the property at the original price
- The construction company may go out of business before construction is completed and purchaser may have difficulty to recover the deposit.
- Finished property may not meet the buyer’s original expectation in sizing or material used
House and Land package
House and Land package is a package deal which includes the land and the build of a new home. There are a few types of a package deals available:
- You purchase the land and a pre-designed home is built on it
- You purchase any land of your choice and choose home designer
Buying a house and land package can be different in financing then apartments. There are two ways of financing:
- One part contract – you pay the deposit and the remainder will be paid on the completion of construction, similar to an apartment purchase
- Progress payment – you purchase and settle the land and on construction you pay progress payment on completion of each stage (slab stage, frame stage, lock up stage, fixing and practical completion)
Don’t “sign on the dotted line” until you have all of your questions answered to your satisfaction:
- Who is developer / builder – their reputation and the quality of the final project (inspect display homes or variety of homes)
- What is included in your price – clarify all aspects of construction (what is in the display home may not be included in your price, generally display homes have higher specifications)
- Many developers / builders allow customisation of design and layout – communicate with the salesperson all your options and costs involved (if you decide to make changes later in construction process it may end up costing you more)
- Time of completion and landscape included
- Finance – be realistic about your budget, both now and into the future
Buying a house and land package is still purchasing property off-plan, and incurs more risks then buying a property that has already been built.
Purchase existing property
Most off-plan properties have a fixed price and there is limited movement in negotiations. The price of an existing property is negotiable and it depends on supply and demand in area of interest.
- Organise finance – have a pre-approval in place, contact your broker
- Be aware about your borrowing capacity and affordability of repayments now and in the future (your personal situation may change or the interest on loans may change)
- Select the suburb and if price is too high consider the next suburb
- If you have a preferential suburb, then consider the size of the property (this may be the time to consider a townhouse or apartment)
- List your reasons why you want a specific suburb – why is that suburb important to you (close to work, family, lifestyle, investment opportunity)
- Check with local council about future development and infrastructure and if this may affect your selection
- Check with your broker if you change the size of the property (if you only can afford an apartment, check if bank will support the size (sqm) and number of apartments in the complex)
- Is there an Owners Corporation involved, check the rules in the event you want to make changes etc
- Understand the difference between a Private Sale and an Auction
- Private Sale: negotiation is more flexible such as: selling price, fixture and fittings staying in the property, items that can be excluded and removed before settlement, settlement length, deposit amount, and could be subject to your conditions such as building inspection or finance approval
- Auction: A reserve is set by the Vendor and then the final price is determined by the other interested parties. There is no room for negotiation and the sale is not subject to any of your own conditions. Make sure your finances are in place before your go to auction as once you are successful at auction you are generally contractually bound.