Majority of off-the-plan apartments worth less than purchase price, data shows

| 22.10,19. 02:07 AM |

Majority of off-the-plan apartments worth less than purchase price, data shows

Photo: Off-the-plan apartments have seen a drop in value in Sydney, Melbourne and Brisbane. (ABC News: Jessica Hinchliffe)

Shaky confidence in the capital city apartment market is hitting off-the-plan buyers hard, with a significant rise in the number of newly constructed units now worth less at completion than the price they were originally purchased for.
7.30 can reveal that 60 per cent of off-the-plan apartments in Sydney, and 52.9 per cent in Melbourne, were valued lower than their contract price at the time of settlement.
The latest figures from property data provider CoreLogic for the month of August shows that nearly a third of off-the-plan buyers in Sydney were moving into new apartments worth at least 10 per cent less than the price they purchased them for.
Just two years ago, less than 16 per cent of newly constructed NSW units were valued below contract price after they were completed.
In Queensland, 43.1 per cent of units were worth less at settlement than what they were purchased for, and in Western Australia it was 22.5 per cent of apartments.
'A very fundamental shift in value'

Photo: Opal Tower was evacuated last year when cracks were found in the
building. (ABC News: Nick Sas)

CoreLogic's head of research, Tim Lawless, said when many of these newly completed apartments were originally sold off the plan back in 2016 and 2017, the market was very different.
"We were seeing values rising at about 15 to 20 per cent per annum in Sydney and Melbourne," Mr Lawless said.
"Now cast your mind forward to 2019 and we've seen prices come down in Sydney by 15 per cent. In Melbourne, they're down by about 11 per cent.
"A lot of those off-the-plan buyers have seen a very fundamental shift in the value of the project that they purchased a couple of years ago."
Mr Lawless said there had been a significant oversupply in the high-rise sector, with supply substantially outpacing demand.
But he said concerns around construction quality, remediation costs and flammable cladding had had a compounding effect.
"That [is] probably also weighing on the minds of people in the marketplace and potentially affecting the resale value of those properties as well," he said.
A string of negative headlines has plagued the apartment market in the past two years, beginning with London's Grenfell Towers fire in June 2017 and the discovery of the widespread use of combustible cladding on apartment buildings.
In Australia, confidence in the market was further destabilised after the evacuations of Sydney's Opal Tower on Christmas Eve 2018 and Mascot Towers in June of this year.
Mascot Towers owners still in limbo
An apartment block

Photo: Cracks at Mascot Towers have gotten worse, residents have been advised. (AAP: Bianca De Marchi)

Owners at the 10-storey Mascot Towers in Sydney have fared far worse than most.
Not only have residents such as retiree Maree Peters watched their building garner major media coverage for its structural defects, they have still not been able to return to their homes.
"We have an asset worth one and a half million dollars that right now is worth nothing," Ms Peters said.
"It's your home, it's everything you worked for, that you think is safe, that you think is protected."
Having recently learnt that the cracks in their building are widening, owners will meet Tuesday to vote on a program to fund their building repairs.
They will decide between a commercial strata loan or a multi-million-dollar levy to pay for urgent repairs.
Stage one of the levy would cost around $7.7 million.
"At the moment we have a building that if we don't do anything it's worth nothing, and unless we put money in to try and get some value back we are left with an asset that is worthless," Mascot Towers owner Brian Tucker said.


(Votes: 0)

Other News

Gold Coast a hotspot for illegal hooning spurred on by car races, senior police warn Armed bandit with black-marker 'tattoos' jailed over robbery at Rockhampton service station Police arrest man over alleged sexual assault of woman in Thornbury park in Melbourne's north Man dies after being hit with firearm in Springfield Lakes car pursuit, two 19yo men charged with murder Grafton and Kempsey bus crashes remembered 30 years after the tragedies Pinkett Road bushfire at Backwater near Armidale downgraded to watch and act Not all parents vaccinate their kids. But that doesn't mean they're anti-vaxxers The charge for electric vehicles puts the shine on nickel Car crashes at Sydney cemetery, ends up on side Bus full of students collides with tractor, one airlifted to hospital One dead, one critical in separate snorkelling incidents off Queensland coast Flights, ferries between Manly and Circular Quay cancelled as strong winds hit Sydney Mum jailed over 200km/h police chase Big chain petrol more expensive than independent outlets NSW Police charge man with murder after two die in Tamworth house fire Commonwealth Bank payment services down across Australia Man arrested after $200,000 drug raid in Perth Victorian aged care facility rostering five staff to more than 100 patients, royal commission hears A boy and his father were shot dead by Australian soldiers in Afghanistan. New reports claim they were unarmed NSW Premier reiterates Government's opposition to pill testing despite coroner's impending recommendation Mascot Towers engineers find new cracks and warn urgent repairs needed to avoid 'structural failure' IMF predicts synchronised slowdown in global growth, warns rate cuts are not enough to stop it NSW coroner to recommend pill testing be introduced at music festivals Pill testing explained ATO phone scammers turn up at Adelaide man's house dressed as police with eftpos machine Police 'puzzled' by disappearance of Adelaide woman missing in dense bushland Hundreds evacuated from Sydney Ikea after gas fumes affect warehouse Child hit and killed by car outside childcare centre in Melbourne's north Congestion charge the cheapest, most effective way to reduce traffic jams in Australia, report finds Townsville prison escapee caught after week on the run P-plater ploughs through Melbourne home, trapping pet dogs