Hi All,
I'm very new to this forum (only came across it today) but I'm loving the info/advice so far. Myself and my partner (both age 25) have just recently purchased our first property, an apartment OTP in a boutique development (32 apartments) in the Newcastle CBD. It's scheduled for completion in March/April 2016 (the developers are anticipating a 9 month build which I find to be very ambitious, so expecting actual completion in July/August at least). Our plan is to reside in the apartment for 6-12 months after completion than convert to an IP. Apartment is 2 bed + study, 1 bath w/ 2nd separate toilet. Internal living space 90m2 with 25m2 of courtyard. No car spaces.
Firstly, I'd like to share my thought process behind the purchase:
- My partner and I are desperate to get a start in the property market but do not have the savings for a deposit on an established property. Purchasing OTP has enabled us to utilise a deposit bond for part of the deposit, and we are confident in our ability to save the amount required to repay the bond at time of settlement. If we waited to save the deposit we'd be 2-3 years from purchasing.
- Purchasing OTP has allowed us to obtain FHBG of 15k, plus receive full stamp duty exemption (saving of approx 17k)
- Location is excellent - 100m to parks/foreshore and new university development (set to school 4,000 students), 500m to large shopping centre and popular dining strip. If planned light rail line is implemented, 100m to nearest stop.
- Apartment is somewhat 'unique' - Apartment will be located on ground floor along with 3 others that will be 'warehouse' design i.e. timber floors throughout, high ceilings, pendent lighting. I have not seen anything similar to this in the numerous other developments occurring, so I feel this point of difference could add value.
- Newcastle revitalisation - plenty of money to be spent on building infrastructure (light rail, access to foreshore) and generally improving the Newcastle CBD in the next 5 years+
- Developer history - Same developer of this complex has recently restored a heritage building in Newcastle CBD into 1 bed and studio apartments. Development has just reached completion, with one apartment selling for $53k above the OTP purchase price of $285k. Also comparing the artists impressions of that development to the finished article brings promise, the quality seems to be there.
I've read a lot about the main risks of buying OTP (undervalued at time of settlement leading to financing issues, changes in circumstances etc), but I would love any advice about the Newcastle apartment market in general. There is a significant number of apartment complexes in various stages of development of quite significant scale (100+ dwellings). Is there a chance of market saturation in the near future? I'm particularly worried that this may occur if talk of the old rail line being developed rather than turned into green space is true.
Also, judging the value of a car space in Newcastle has been difficult. The whole complex has only 5 spaces available as they are focusing on a 'green' image (large bike storage areas instead). I have been able to find very few similar OTP offerings without car spaces, so comparing the value of the apartment has been hard. It will work fine for us whilst living there, but our concern is how severely it will impact our rental return.
Any thoughts/opinions about any risks I may have missed, and on the Newcastle apartment market in general would be greatly appreciated!
Cheers, Tom
I'm very new to this forum (only came across it today) but I'm loving the info/advice so far. Myself and my partner (both age 25) have just recently purchased our first property, an apartment OTP in a boutique development (32 apartments) in the Newcastle CBD. It's scheduled for completion in March/April 2016 (the developers are anticipating a 9 month build which I find to be very ambitious, so expecting actual completion in July/August at least). Our plan is to reside in the apartment for 6-12 months after completion than convert to an IP. Apartment is 2 bed + study, 1 bath w/ 2nd separate toilet. Internal living space 90m2 with 25m2 of courtyard. No car spaces.
Firstly, I'd like to share my thought process behind the purchase:
- My partner and I are desperate to get a start in the property market but do not have the savings for a deposit on an established property. Purchasing OTP has enabled us to utilise a deposit bond for part of the deposit, and we are confident in our ability to save the amount required to repay the bond at time of settlement. If we waited to save the deposit we'd be 2-3 years from purchasing.
- Purchasing OTP has allowed us to obtain FHBG of 15k, plus receive full stamp duty exemption (saving of approx 17k)
- Location is excellent - 100m to parks/foreshore and new university development (set to school 4,000 students), 500m to large shopping centre and popular dining strip. If planned light rail line is implemented, 100m to nearest stop.
- Apartment is somewhat 'unique' - Apartment will be located on ground floor along with 3 others that will be 'warehouse' design i.e. timber floors throughout, high ceilings, pendent lighting. I have not seen anything similar to this in the numerous other developments occurring, so I feel this point of difference could add value.
- Newcastle revitalisation - plenty of money to be spent on building infrastructure (light rail, access to foreshore) and generally improving the Newcastle CBD in the next 5 years+
- Developer history - Same developer of this complex has recently restored a heritage building in Newcastle CBD into 1 bed and studio apartments. Development has just reached completion, with one apartment selling for $53k above the OTP purchase price of $285k. Also comparing the artists impressions of that development to the finished article brings promise, the quality seems to be there.
I've read a lot about the main risks of buying OTP (undervalued at time of settlement leading to financing issues, changes in circumstances etc), but I would love any advice about the Newcastle apartment market in general. There is a significant number of apartment complexes in various stages of development of quite significant scale (100+ dwellings). Is there a chance of market saturation in the near future? I'm particularly worried that this may occur if talk of the old rail line being developed rather than turned into green space is true.
Also, judging the value of a car space in Newcastle has been difficult. The whole complex has only 5 spaces available as they are focusing on a 'green' image (large bike storage areas instead). I have been able to find very few similar OTP offerings without car spaces, so comparing the value of the apartment has been hard. It will work fine for us whilst living there, but our concern is how severely it will impact our rental return.
Any thoughts/opinions about any risks I may have missed, and on the Newcastle apartment market in general would be greatly appreciated!
Cheers, Tom