Authored by the expert who managed and guided the team behind the Australia Property Pack
Everything you need to know before buying real estate is included in our Australia Property Pack
Off-the-plan purchasing in Australia involves buying a property before construction is complete, based solely on architectural plans and developer promises. This approach offers potential savings and customization opportunities but carries significant risks around market changes, construction delays, and developer reliability that established property purchases don't face.
If you want to go deeper, you can check our pack of documents related to the real estate market in Australia, based on reliable facts and data, not opinions or rumors.
Off-the-plan purchases in Australia typically require a 10% deposit with settlement 1-3 years later when construction completes. While offering potential price savings and tax benefits, buyers face risks from market value changes, construction delays, and developer issues.
The main advantages include access to government incentives, depreciation benefits for investors, and customization options, while key risks involve financing challenges at settlement if property values decline below contract price.
| Aspect | Off-the-Plan | Established Property |
|---|---|---|
| Deposit Required | 10% (sometimes staged payments) | Usually 10-20% |
| Settlement Timeline | 1-3 years after contract | 6-12 weeks after contract |
| Inspection Ability | Plans and display suite only | Full property inspection possible |
| Stamp Duty Benefits | Often reduced or deferred | Full rate applies |
| Depreciation Benefits | Maximum (new property) | Limited (established property) |
| Market Risk | High (value changes over 1-3 years) | Lower (immediate settlement) |
| Customization Options | Available within developer limits | Post-purchase renovations only |
What exactly does buying off-the-plan in Australia mean in practice, and how does it differ from buying an established property?
Off-the-plan purchasing means you're buying a property that exists only on paper—architectural drawings, floor plans, and 3D renderings—before any construction begins.
You sign a contract and pay a deposit based entirely on the developer's plans and promises about what will be built. This contrasts sharply with established property purchases where you can walk through the actual home, test the taps, check the building condition, and see exactly what you're getting before committing your money.
The practical difference extends beyond just visualization. With off-the-plan purchases, you're essentially placing a bet on the developer's ability to deliver what they've promised, within the timeframe specified, and at the quality level illustrated in their marketing materials. You can't inspect the actual property because it doesn't exist yet.
It's something we develop in our Australia property pack.
How much money do I need upfront for a deposit, and when do the rest of the payments fall due?
Most Australian off-the-plan purchases require a 10% deposit of the total purchase price, though some developers offer staged payment plans starting from as little as $10,000.
The deposit is typically held in a trust account or controlled money account, which provides legal protection if the developer faces financial difficulties. Some developers allow you to pay this deposit in installments during the construction phase, spreading the financial burden over 12-24 months rather than requiring the full amount upfront.
The remaining 90% of the purchase price becomes due at settlement, which occurs when construction is complete and the property is ready for handover. This settlement period usually falls between 12 months and 3 years after signing the initial contract, depending on the project's complexity and size.
During the construction period, you don't make mortgage payments on the property since you don't own it yet. However, you'll need to have your financing pre-approved and ready for when settlement arrives, as banks will revalue the property at completion based on current market conditions.
What government incentives or tax benefits are available for off-the-plan buyers in Australia right now?
As of September 2025, off-the-plan buyers in Australia can access several valuable government incentives that established property buyers cannot.
Stamp duty concessions represent the most significant benefit, with most states offering either reduced rates or deferred payment options for off-the-plan purchases. For example, some states allow you to pay stamp duty on the land value only at contract signing, with the building component deferred until settlement. First Home Owner Grants are available in several states specifically for new construction, including off-the-plan properties, providing cash grants ranging from $10,000 to $25,000 depending on your location.
For investors, the tax advantages are particularly compelling. New properties offer maximum depreciation benefits, allowing you to claim deductions on building depreciation (2.5% per year for 40 years) and plant and equipment depreciation on fixtures and fittings. These depreciation benefits can significantly improve your after-tax cash flow compared to established properties where depreciation benefits are minimal.
Some states also offer Foreign Investment Review Board (FIRB) fee reductions for off-the-plan purchases, making them more attractive to overseas buyers compared to established properties.
Don't lose money on your property in Australia
100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.
How do I check the developer's track record and the builder's financial stability before signing anything?
Researching your developer's reliability requires systematic investigation across multiple sources and shouldn't be skipped regardless of how attractive the project appears.
Start by examining their previous completed projects—visit these developments in person, speak with current residents about build quality and any issues they've experienced, and check online reviews on platforms like Google and Facebook. Request a list of their last five completed projects with completion dates to verify they deliver on time.
Check the Australian Securities and Investments Commission (ASIC) database for any corporate actions, insolvency proceedings, or legal disputes involving the developer or related companies. Search local court records for any ongoing litigation related to construction defects or contract disputes from previous projects.
For financial stability, ask to see the developer's financial statements, bank guarantees, and evidence of construction financing already secured. Reputable developers will provide these documents transparently. Also verify that proper insurance policies are in place, including professional indemnity insurance and building warranty insurance that will protect you if issues arise after completion.
What protections do I have under Australian consumer law if the project is delayed, altered, or not delivered as promised?
Australian consumer law provides several layers of protection for off-the-plan buyers, though the strength of these protections varies by state and contract terms.
Your deposit must be held in a trust account or controlled money account, meaning it's protected even if the developer becomes insolvent during construction. This legal requirement ensures you can recover your deposit if the project fails to proceed. Most states also mandate builders' warranty insurance that covers certain structural defects for periods ranging from 6-10 years after completion.
If the developer significantly alters the plans from what you contracted for—such as changing apartment sizes, removing promised amenities, or using substantially different materials—you typically have the right to withdraw from the contract and receive a full refund. However, minor changes are usually permitted under standard contracts.
For project delays, your contract should specify maximum timeframes and penalties if these aren't met. Some contracts include "sunset clauses" that allow either party to withdraw if construction isn't completed by a certain date, usually 4-5 years from the contract date.
It's something we develop in our Australia property pack.
How much time typically passes between signing the contract and actually moving into the property?
The typical timeline from contract signing to moving into your off-the-plan property in Australia ranges from 18 months to 3 years, with most projects completing within 2-2.5 years.
Construction timing depends heavily on the project's complexity and size. A small townhouse development might be completed within 12-18 months, while a large apartment tower could take 2.5-3 years or longer. High-rise developments in major cities like Sydney and Melbourne typically take longer due to complex approval processes and construction logistics.
Several factors can extend these timeframes beyond the developer's initial estimates. Planning approval delays, adverse weather conditions, labor shortages, and changes in building regulations can all push completion dates back by several months. Some projects also face delays due to pre-sales requirements—developers often need to achieve 70-80% sales before starting construction.
Always factor in potential delays when planning your move-in date, especially if you need to coordinate the sale of your current home or arrange temporary accommodation. Smart buyers build a 6-12 month buffer into their timeline expectations.
What are the biggest risks around property values dropping between the contract date and settlement?
Market value decline represents the most significant financial risk in off-the-plan purchases, as you're locked into a price that may no longer reflect market reality by settlement time.
If property values in your area drop significantly during the 1-3 year construction period, you could face a situation where your contract price exceeds the property's current market value at settlement. This creates immediate negative equity—you owe more on the property than it's worth. In extreme cases, if values drop by 15-20% or more, you might find yourself unable to secure sufficient financing to complete the purchase.
The risk is particularly acute in markets experiencing rapid supply increases. New apartment developments can flood certain suburbs, creating oversupply that depresses values just as your property reaches completion. Areas with multiple competing off-the-plan projects launching simultaneously face heightened risk of value declines.
Economic downturns, interest rate increases, or changes in foreign investment policies can also significantly impact property values during your construction period. Unlike established property purchases where you settle quickly, off-the-plan buyers remain exposed to these macroeconomic risks for years.
How do banks in Australia value off-the-plan apartments at settlement, and how might this affect my ability to get finance approved?
Banks conduct fresh property valuations at settlement based on current market conditions, not the price you agreed to pay years earlier when signing the contract.
| Valuation Scenario | Impact on Finance | Buyer Action Required |
|---|---|---|
| Property value equals contract price | Pre-approved loan proceeds normally | Complete settlement as planned |
| Property value exceeds contract price | Increased equity, possible better loan terms | Potential to access equity for other investments |
| Property value 5-10% below contract price | May need larger deposit or different loan terms | Find additional funds or renegotiate loan |
| Property value 10-15% below contract price | Significant financing challenges | Major additional funds required or contract exit |
| Property value 15%+ below contract price | Bank may refuse to lend sufficient amount | Risk losing deposit if unable to settle |
| Oversupply in building/area | Banks may reduce lending appetite entirely | Seek alternative lenders or exit strategies |
| Building defects discovered | Valuation reduced until rectified | Negotiate with developer for fixes |
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What ongoing costs should I expect once I take ownership, such as strata fees, council rates, or maintenance levies?
Off-the-plan properties in Australia come with several ongoing costs that you need to budget for beyond your mortgage payments.
Strata fees for new apartment developments typically range from $2,000-$8,000 annually depending on the building's amenities and size. New developments often start with lower strata fees that increase over time as the building ages and requires more maintenance. Buildings with extensive facilities like pools, gyms, concierge services, and rooftop gardens command higher strata fees, sometimes exceeding $10,000 per year in luxury developments.
Council rates vary significantly by location and property value, typically ranging from $1,200-$4,000 annually for apartments in major cities. Water usage charges, building insurance, and contents insurance add another $1,500-$3,000 per year. If you're renting the property out, you'll also face property management fees of 6-8% of rental income, plus advertising costs for tenant changeovers.
New properties often come with special levies in the first few years to build up the sinking fund for future major repairs, potentially adding $1,000-$3,000 to your annual costs during this establishment period.
How much freedom do I have to choose finishes, floor plans, or upgrades, and what are the costs of making changes?
Your customization options depend heavily on when you purchase during the project's sales cycle and which developer packages are available.
- Early buyers (first 20-30% of sales) typically get the most flexibility, including choice of floor plans within reason, upgraded finishes, and sometimes minor layout modifications
- Mid-cycle buyers usually can select from pre-determined finish packages and color schemes but have limited structural modification options
- Late buyers often purchase "as-designed" with minimal customization available beyond basic color selections
- Upgrade costs typically range from $10,000-$50,000+ depending on the extent of changes, with kitchen and bathroom upgrades being the most expensive
- Floor plan changes may incur architectural and engineering fees of $5,000-$15,000 plus the cost of structural modifications
Most developers offer upgrade packages for flooring (from carpet to timber or tiles), kitchen appliances (from basic to premium European brands), bathroom fixtures, and air conditioning systems. These packages are usually more cost-effective than making similar changes after settlement, but they're also non-negotiable—you pay the developer's quoted price or stick with standard inclusions.
What exit strategies exist if I change my mind or can't settle when the property is finally ready?
Several exit options exist for off-the-plan buyers, though each comes with potential costs and complications that vary based on your contract terms and market conditions.
Assignment or resale before settlement is the most common exit strategy, where you sell your contract to another buyer. This requires developer approval and market demand for your specific property type. In strong markets, you might profit from assignment, but in weak markets, you may need to sell at a loss. Assignment fees typically range from $1,000-$5,000 plus legal costs.
If you simply cannot settle due to financing issues or personal circumstances, you risk losing your entire deposit and facing legal action from the developer for breach of contract. Developers can pursue you for any losses they suffer, including the difference between your contract price and what they eventually sell for, plus their legal and marketing costs.
Some contracts include cooling-off periods (typically 5-10 business days) where you can withdraw with minimal penalty, usually 0.25% of the purchase price. Beyond this period, your options become much more limited and expensive.
Contract novation—transferring your obligations to another buyer—is another option but requires all parties' agreement and often involves significant legal fees of $2,000-$5,000.
How does buying off-the-plan compare financially and practically with buying an established property in the same area?
The financial comparison between off-the-plan and established properties involves weighing potential savings against increased risks and uncertainty.
Off-the-plan properties often sell at 5-15% below equivalent established property prices in the same area, providing immediate equity if the market remains stable. The stamp duty savings can be substantial—potentially $10,000-$30,000+ depending on your state and purchase price. For investors, the depreciation benefits from new properties can provide $3,000-$8,000 annually in tax deductions for the first decade.
However, established properties offer immediate certainty and faster settlement, allowing you to start earning rental income or move in within 6-12 weeks rather than waiting 1-3 years. You also avoid the risk of market value changes during construction and can inspect the actual property condition before committing.
Practically, established properties provide immediate gratification and certainty, while off-the-plan purchases require patience and tolerance for uncertainty. If you need housing immediately or want to start generating rental income quickly, established properties make more sense despite the potentially higher upfront costs.
It's something we develop in our Australia property pack.
The choice ultimately depends on your risk tolerance, timeline flexibility, and whether the potential savings justify the additional uncertainties and complexities involved in off-the-plan purchasing.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Off-the-plan property purchases in Australia offer compelling opportunities for buyers seeking potential savings, government incentives, and customization options, but require careful consideration of market risks and developer reliability.
Success depends on thorough due diligence, realistic timeline expectations, and having sufficient financial flexibility to handle potential market changes during the extended settlement period.
It's something we develop in our Australia property pack.
Sources
- Di Jones - Off the Plan vs Established Property
- Loans.com.au - Buying Off the Plan vs Established Home
- MMO - Established vs Off Plan vs Land Build
- CJC Law - Off the Plan vs House and Land
- CommBank - Buying Property Off the Plan
- Calibre Real Estate - Essential Guide to Off Plan Property
- Coposit - Payment Plans in Off-the-Plan Purchases
- WA Government - Off the Plan Duty Concession
- Entourage - First Home Owners Grant 2025
- ANZ - Buying Off the Plan Pros and Cons