Australian property developers are getting really desperate.
This year, we saw a rise in the number of developers offering freebies such as free utilities and strata bills, free mortgage repayments, free Vespas or cars, and even throwing all-expenses-paid parties just to incentivise buyers.
Related story: Are those wild forecasts for property in 2020 realistic?
And according to Suburbanite principal and property analyst Anna Porter, you’re missing out if you’re not scoring yourself a freebie.
“Anything from reduced rates to free cars and even furniture gift cards are currently being offered,” she said. “There’s a development in Sydney Olympic Park which is even guaranteeing rental income for two years for the first 10 buyers.
“Units and apartments are oversupplied and developers are starting to feel the pinch.”
10 Australian properties offering freebies
According to Porter and realestate.com.au, these are some examples of developers who will throw in free furniture, help you with your deposit or pay for rent for some early-bird buyers:
Moonee Ponds, Melbourne: $0 rates or body corporate for two years
Cremorne Melbourne: $20,000 towards deposit
Parramatta & Rhodes: Meriton is offering cheaper finance
Sydney Olympic Park: Mirvac is guaranteeing rental income for two years for the first 10 buyers
Epping: $5,000 gift card for referrals
Essendon Village, Melbourne: offering a car for next two purchasers who buy before Christmas
Montage, Mont Albert Melbourne: free additional carpark with any apartment purchased
Moreville, Footscray Melbourne: $30,000 Coco Republic Voucher
Vic Square, Footscray Melbourne: Double the FHB Grant
Buyers have bargaining power
The good news is, desperate developers offering big incentives puts prospective buyers in the driver’s seat – so don’t be afraid to haggle hard. After the incentives run out (such as free rent or mortgage repayments for a period), just be sure you can afford the properties after they run out.
“Ask yourself (or team of property professionals) if there is a vacancy issue in the market and if you will have to reduce the rent to get a tenant, or have large gaps between tenants once the guaranteed period expires. If so, make sure you can afford that.
“Have you also considered your ability to repay the loan after the incentive period?”
Freebies aren’t without risk
However, Porter warned buyers that snapping up a property without doing your due diligence can end badly.
“Don’t be lured in by the car that comes with the unit or the holiday,” she warned. “Focus more on getting the right property for the right price and save yourself money, over getting a holiday.
“The developer will factor the cost of the incentive in the price. You must ask yourself, would you rather save $20,000-$30,000 or get a cheap holiday?”
Developers factor the incentives into their pricing – so one way to negotiate is to ask for a discount on the property price or get them to offer a lump sum cash back on settlement.
Rental guarantees and mortgage repayments can carry longer-term risks, she said.
“If the developer goes bust or simply walks away from the development then how do you get the money from them? It can be very hard to recoup those funds without a costly legal battle,” she said.
“So, getting the cash, discount or item upfront at settlement is a lower risk option.”
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.