Bargain Hunters Flock to Unfinished Homes Amid Rising Property Costs

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The real estate market is witnessing a surge in demand for half-built homes, offering substantial discounts but accompanied by notable risks, according to industry experts and agents. This trend has been highlighted by the increased interest from buyers, including property flippers and owner-occupiers looking to score deals on unfinished properties.

In an article by Benn Dorington, it’s revealed that while residential construction costs have stabilized, building materials remain significantly higher than pre-pandemic prices, creating financial pressures that have led to the collapse of numerous home builders. “The higher costs have pushed many home builders to collapse, leaving half-built homes in their wake and stranded owners with limited options,” Dorington notes.

The competition for these properties is intense. Andrew Boman, a selling agent with Ray White Mt Gravatt, shared his experience with an unfinished home in Mount Gravatt East, Brisbane. “With how hard it is to get a builder at the moment, even having a house at the frame-up stage has been appealing,” Boman told realestate.com.au. He added, “There’s also been families who are looking to finish the project. It has appealed to a wider audience than I was anticipating.”

Another hotspot for unfinished homes is in regional NSW, where an unfinished home at 31 Highland Avenue in Cooranbong has drawn remarkable interest. Mitchell Petty from PRD Real Estate described the response as “absolutely ‘crazy’ interest.” He elaborated, “First-home buyers that were going to buy house-and-land packages see this as a good opportunity to get something better for their money.”

However, the risks involved cannot be understated. Simon Cohen, a buyer’s agent, warned potential buyers of the uncertainties tied to such investments. “It’s risky in the sense that you don’t know what you’re taking on,” Cohen expressed. He stressed the importance of finding someone capable of taking over someone else’s project, particularly concerning insurance and budgeting for unforeseen costs.

Denita Wawn, CEO of Master Builders Australia, highlighted the need for due diligence. “It’s important for buyers to ensure the developer and builder had all the right checks and balances in place including insurance, as well as having an appropriate buffer for any unexpected events or delays,” she advised.

Despite the challenges, the allure of securing a property below market value continues to draw significant attention from various buyer segments, indicating a robust interest in this high-risk, high-reward sector of the real estate market.

Reference:

https://www.realestate.com.au/news/how-buyers-can-bag-a-bargain-but-its-not-for-the-faint-of-heart/