Home buyers offered 'incentives' as Aussie property market declines: 'More leverage'

With auction clearance rates sitting below 60 per cent across most major cities and buyer competition at its lowest point in several years, developers who barely needed to advertise eighteen months ago are now actively competing for buyers.

Most buyers hear that competition has eased and immediately think about negotiating a lower price. That should certainly be part of the conversation, but when buying off the plan, the contract can be just as important as the price.

An off-the-plan buyer is committing to a property that may not be completed for another two or three years. During that time, lending conditions can change, valuations can move and the finished apartment may differ from what appeared in the original brochure.

A qualified buyer with their deposit and finance organised can now have considerably more leverage than they would have had eighteen months ago. The opportunity is not simply to make the deal cheaper. It is to negotiate a more balanced agreement that better protects the purchaser.

Look beyond the advertised price

Price is the obvious starting point, but it is not always where a developer will be most flexible. Developers can be reluctant to publicly discount because comparable sales affect future project valuations and development finance. However, they may be prepared to improve the overall package in other ways.

That could include a contribution toward stamp duty or legal fees, upgraded appliances, better flooring, additional storage, a superior car space or owners corporation fees paid for an agreed period. A smaller deposit is also worth exploring. In Victoria, the deposit cannot exceed 10 per cent, but a developer may accept 5 per cent, leaving the remainder in the buyer's offset account until settlement.

The key is placing genuine value on every incentive rather than accepting what the developer claims it is worth.

Negotiate certainty around the sunset date

Sunset clauses are often misunderstood. Removing the clause is not in the buyer's interest because it provides a clear deadline and the right to exit if the project does not proceed. The better approach is to negotiate how it operates.

A buyer's solicitor should seek a clearly defined completion date, a right to terminate if the plan is not registered by that date, and the prompt return of the deposit if the contract ends. The buyer should also seek to limit the developer's ability to extend the completion timeline without clearly defined justification and independent review. If the developer cannot deliver within the agreed timeframe, the buyer needs to understand exactly what rights they hold and how long their money could remain tied up.

Limit changes to the finished apartment

Off-the-plan contracts give developers flexibility to alter plans, dimensions and finishes during construction. With less competition, buyers may be able to negotiate tighter limits on reductions to floor area, balcony, car space or storage, and wording requiring substituted finishes to be of equivalent or better quality. For owner-occupiers this protects liveability. For rentvestors it protects tenant appeal and resale value.

Address settlement and finance risk

Finance is normally finalised at settlement, not at signing. Income can change, rates can move, and the bank's valuation at settlement may come in below the contract price, leaving the buyer to fund the shortfall. Where negotiating power exists, buyers should explore a longer settlement period, adequate notice of the anticipated completion date, or permission to use a deposit bond. A strong buyer should use that leverage before signing because it is too late to renegotiate when settlement is approaching.

Less competition creates leverage, not certainty

A quieter market does not automatically make an off-the-plan purchase a good investment. The developer's track record, builder quality, planning status, location and depth of future demand still need to be assessed independently.

Less competition simply gives disciplined buyers more power to reject poor terms and request better ones. The best negotiation may involve a lower price, but it could equally be a reduced deposit, better inclusions, tighter variation provisions or clearer rights if the project is delayed.

The objective is not merely to secure a discount. It is to secure the right apartment under a contract that gives the purchaser greater certainty about what will be delivered, when it will be completed and what happens if things do not go to plan.

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