Pros and Cons of Buying Off the Plan in Chatswood

What Does ‘Buying Off the Plan’ Mean?

Buying off the plan means purchasing an apartment before construction is complete, sometimes before the first sod is even turned. You sign a contract, pay a 10% deposit, and settle when the building is registered. In Chatswood, off-the-plan purchases are typically with established developers like Billbergia and involve a settlement period of 18 to 36 months.

Pros of Buying Off the Plan in Chatswood

1. Lock In Today’s Price for Tomorrow’s Market

Off-the-plan contracts fix your purchase price at the time of signing. In a rising market like Chatswood has historically been, you benefit from any price appreciation during the construction period without having paid the higher price upfront.

2. Lower Stamp Duty

In NSW, stamp duty is assessed on the contract price minus the construction cost, which effectively means you pay on the land component only. For a $1.3M Chatswood apartment, this can mean paying stamp duty on $600,000 to $800,000 of land value rather than the full price, saving $10,000 to $30,000 upfront.

3. Customisation Options

Buyers who purchase early often have the ability to select finishes such as kitchen and bathroom schemes, flooring, and appliance brands. These choices are simply not available to resale buyers.

4. Extended Time to Save

The 18 to 36 month construction period gives you additional time to save before settlement. Instead of a hard deadline 6 weeks after exchange, off-the-plan buyers can continue saving to reduce their mortgage.

5. Brand New with Warranty

Off-the-plan apartments are delivered brand new with full builder’s warranties: six years for structural defects and two years for non-structural. Everything from appliances to waterproofing is new.

6. Maximum Depreciation for Investors

New apartments deliver the highest depreciation claims available in residential property investment. A Chatswood off-the-plan purchase from Billbergia can generate a depreciation schedule worth $15,000 to $25,000 or more per year in the early holding period. For investors, that is a powerful tax benefit.

Cons of Buying Off the Plan in Chatswood

1. Valuation Risk at Settlement

If property values fall during the construction period, the finished apartment may be worth less than your contracted purchase price. Your lender will only finance based on the lower valuation. You will need to fund any shortfall from savings. This is the most significant risk in off-the-plan buying.

2. You Cannot Inspect Before Buying

Off-the-plan buyers make their decision based on floor plans, renders, material samples, and display suites rather than the actual apartment. There is an inherent gap between what is promised and what is delivered, although quality developers like Billbergia consistently match or exceed their representations.

3. Construction Delays

Building projects face delays. Council approvals, material shortages, contractor issues, and weather can all push completion dates back. A delay of 3 to 6 months is not uncommon.

4. Deposit Tied Up

The 10% deposit paid on exchange sits in a trust account and earns minimal interest for the duration of construction.

5. Developer Risk

If a developer becomes insolvent during construction, buyers may face lengthy delays, partial refunds, and uncertainty. This risk is significantly mitigated by purchasing from financially sound, large-scale developers with institutional backing. Developer research is therefore essential.

Is Off the Plan Right for You in Chatswood?

• Strong buy off-the-plan if: You are an investor seeking depreciation, want stamp duty savings, are buying from a proven developer like Billbergia, and have 18 to 36 months before you need to move in
• Consider existing apartments if: You need immediate occupancy, are risk-averse about valuations, or want to physically inspect before committing