What is the difference between an 'off plan' home and a custom built home?

Following a four-year period of sharp decline in prices and consumer demand, market analysts agree that the real estate industry in Australia is on the way to recovery. This is particularly true in the case of the housing market, which has clearly benefited from the recent drop in interest rates. According to figures released by the Australian Bureau of Statistics, during the first quarter of 2013 house price indexes increased by 2.6 per cent. Governmental programmes like the First Home Owner Boost Scheme or the First Home Owner Grant have also contributed to an increase in consumer demand.

If you are one of the many Australian consumers that are seriously considering buying a property, you may be faced with some complex decisions. Should you buy a pre-owned home? How about going for an off plan property? And is it really worth it investing in a custom built home? For the purposes of this article, we will focus on explaining the main differences between off plan and custom built residential properties.

Off plan homes

What exactly are off plan homes? As the name suggests, these are properties that have been planned but not yet built. Prospective homeowners interested in buying an off plan property have to make their decision based on building and design plans, as often it is not possible to visit a showroom, go for viewings, or inspect a property directly before building starts.

Another key characteristic of off plan residential properties is that they are often bought as an investment. This type of property follows a fundamental principle of the real estate industry: property prices will increase as time goes by, so the economic worth of an off plan home will be higher in the future than at the time of purchase. This means that homeowners who go for an off plan property pay a relatively low price for their homes and make a profit off their sale once they are completed. In Australia, there have been many instances of homeowners making a profit of up to $80,000. For example, in the three years between 2008 and 2011, property prices in some areas of the country increased by up to 7 per cent. This fact, coupled with a rise in capital growth rates, means that off plan properties are often seen as a way of making a quick and substantial profit in the real estate market. However, we must not overlook the fact that property prices are also dictated by the laws of supply and demand, which must be taken into consideration before deciding to buy an off plan home.

Another aspect to consider is the fact that off plan properties are quite often designed "in bulk", and developers often apply the same structural and design plans to several homes at a time. As a prospective homeowner, you will need to consider whether the relative lack of personalisation is important to you or not. You should always make sure that you are satisfied with the property's finishes and with the appliances or furniture, wherever applicable.

Custom built homes

Like off plan homes, custom built properties are constructed from scratch. However, the main difference between these two types of properties is the level of personalisation that they allow. In custom built homes, the input of future occupiers is fundamental. Of course, you can still check the developer's portfolio to get some inspiration, but the trademark of custom built homes is that they are constructed exactly to the owner's specifications. In practical terms, this means that future homeowners enjoy a great degree of freedom when it comes to the size, design, style, and layout of their prospective home.

Of course, this means that if you are considering to invest in a custom built home, you will have to put a significant amount of time in working alongside the architects and designers and deciding how every single detail of your new home should look like. For obvious reasons, the demands on the time of the buyer are a lot less when it comes to off plan homes.

Another important difference between off plan and custom built homes is that the latter lend themselves better to green building practices. As a buyer, you can make suggestions and decisions as to the kind of materials that are to be used and to the energy efficiency rating of the appliances to be installed. It is also possible to make sure that the developers work with contractors that enforce sustainable waste management practices during the building process.

Because buying a property is one of the most important decisions anyone can make, it is essential to weigh the pros and cons of the options available. By using the points raised in this article, you can make a wise decision regarding your future home.

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