Canberra off the plan loan approval

Hi,

I was just wondering what everyone's experience is with getting unconditional approval for an off the plan apartment purchase in Canberra?

I know the Sydney and Melbourne markets are weak but are there many people in Canberra unable to get their property valued for what they paid for it in Canberra?

I am considering Denman Prospect specifically and finding it hard to determine what the true value of the apartments will be there.

Thanks

 

Haven’t had any too many OTP vals come in lower in Canberra - especially not compared to Syd or Melb.

Having said that - if you decide to purchase OTP it’s a good idea to have a decent size deposit in case the val comes up short.

Cheers

Jamie

 

My advice - don't do it. Incredible amount of OTP apartments have had major defects in Canberra - in fact probably 80-90% of new build apartment blocks. My experience is that 1-2 years after your purchase, your apartment will be worth less - probably 20-40k less is the history. Not a huge amount as Jamie said but still less. They generally sell for 20-40k more than what the equivalent non new apartment sells for. Almost guaranteed to lose money on valuation on settlement, then the risk of defects and unknown body corp fees and unknown market value rent. Not to mention the exorbitant rates. If you absolutely have to buy OTP in Canberra, take a look at the Geocon projects because they have major discounts and offers on a lot of their apartments throughout Canberra. They have so much for sale and demand is not there so they are heavily discounting. Bargain hard with them. Also don't forget there is no stamp duty payable for first homebuyers in Canberra from July 1.

 

Thanks for your input so far guys.

Ultimately all builds new and old will have something wrong with them, with existing builds you just know what the problem is. Honestly the fact that you are recommending geocon - with such a terrible reputation - makes me question your advice.

I've spent a long time considering my options and a new build with good EER and (hopefully) better soundproofing than the 25 year old apartment I currently live in is a big draw factor. Most of the old apartments I've looked at have gone down in price over the last five years so I accept that there's no money to be made in apartments in Canberra right now.

I'm buying it as a place to live in so the most important thing is that I'm happy there, not that it will go up in value. I just need it to maintain its value at settlement!

Also you mentioned rates, I'm not entirely sure why rates would be more in a new build compared to an old? Is there something I'm not aware of here?

Does anyone know of a good independent valuer for a nearly complete build? Just missing the furnishings really.....

 

Definitely not recommending Geocon but if nearly all new builds have problems then why not get a great discount - they appear desperate to move stock given all the things they are offering to purchasers. Agree if buying to live in then it's totally different and you are looking for different things, presumed it was an investment. Rates the same new and old but just pointing out that they are high in Canberra and if investing then it's something to consider, along with land tax for investors. At least with building 5-10 years old generally you know what you are getting and most major defects have already been identified. just my opinion, buyer beware in Canberra OTP. So many horror stories over so many years just too risky for me.

 

To be fair there are several apartments in Canberra with issues but in terms of perspective there have been a lot built lately and it's a case of you don't hear when things go right!

In the end to buy an old place and renovate it's going to be the same as a new build but with better insulation and that 5-10 year leeway before the body corp fees escalate.

 

I have heard that a large amount of public housing tenants have/will be moved into the general area you are looking at in Wright - Coombs & Denman Prospect Public housing pushed out of Canberra's centre, and here's where it's gone

 

You have chosen among the worst possible locations in Canberra to be looking at apartments. Why Denman Prospect? People generally only buy there to get a new house - generally the house and land package type builds. There is very little demand for apartments in these areas, both by purchasers and tenants. The whole point of apartments is that you sacrifice land and a big house to live somewhere with lots of amenities, close to jobs, the city, etc. This is not it.

If you want an apartment, stick to the inner suburbs or at the very worst, an established town centre like Belconnen. It's not like you're even getting that big of a discount. I know people with apartments in good areas who are having issues finding/retaining tenants. Not sure how much rent you think you'll get there but you risk losing a lot more than 20k if you proceed with this.

 

The LVR I have been pre approved for is an amount I would be comfortable with if it was a pre existing property given my current and future circumstances but because the OTP value can change I am trying to decide if it is too risky.

In terms of why Denman Prospect I believe it is going to be a relatively Central location in a few years. Currently it is ten minutes drive to woden, similar to Belconnen and about 15 to the city until they put in the new link to the Parkway. There is already a supermarket and cafe open and the molongolo valley shopping area is going to be down the road from the smaller suburban centre.

As it is somewhere for me to live in I am not concerned with tenancy problems and the apartment I am considering has everything I had on my list of requirements. I'm realistic that I won't be buying a house soon unless I want to live in the far south which is far less practical in terms of location.

 

This is something I've asked my mortgage broker and I'm waiting for a reply on.

Also why I'm here asking about the frequency of OTP valuation coming in lower in Canberra!

 

The current advice is move in my August this year so the build is nearly complete. Not sure the sunset clause would be an issue here?

 

Are you new to Canberra? I've never heard anyone refer to that area as even somewhat central before.

What's the price? I've seen some on Allhomes for mid 400s and even a bit higher. You can get a 2 bedder in Kingston, Griffith or Braddon for that. I personally think it's a really bad idea. The finance is quite low on the list of possible issues.

 

Canberran born and raised. I really wasn't looking for advice on where to buy so I won't be commenting on this choice anymore.

I think I've also been given all the advice available on OTP valuations in Canberra and no one seems to be screaming that there's an issue with this so I'll see what the solictor says this week about it.

Thanks for your help guys.

 

Just don't want to see you lose money, that's all. Good luck with it anyway