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OfficeStaff WriterSun 21 Sep 14

Research Reveals Capital City Apartment Values Plummet

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Property analysts have issued red alerts against buying apartments in Perth, Brisbane’s CBD and parts of Melbourne’s CBD, after a report revealed plummeting values for apartments in Australia’s capital cities.

Values in Melbourne and Sydney are falling by up to 20 per cent in the time between purchasing off the plan and buyers receiving the keys.

According to WBP Property Group, 44 per cent of apartment ­purchases in the most populous cities are below the sale price at the time of completion, with units in  high-rises in major capital cities the hardest hit.

WBP Chief Executive Officer Greville Pabst said the negative equity appeared to be worst for two-bedroom apartments priced between $500,000 and $700,000.

"Those considering these types of properties as investments should seek details on rental performance and history of capital growth,” Mr Pabst told the Financial Review.

One contributing factor to the depreciating value of apartments is oversupply: there has been a huge increase in the construction of high-rise apartments in capital cities, particularly Melbourne.

And even more supply is set to come: 41,400 high-rise apartments were approved last year for Melbourne, a 30 per cent increase on 2012.

The problem is most acute in Melbourne and Perth, where apartment construction is outpacing population growth, and the slowing manufacturing and mining sectors are reducing demand for labour and accommodation.

In Melbourne, where 100-storey-plus skyscrapers are planned, the vacancy rate in Southbank is over 8 per cent and rising sharply.

It is more than 5 per cent in Docklands and the CBD.

According to the survey, off-the-plan apartments in Sydney, mainly around the CBD, are slipping by about 13 per cent between purchase and possession.

ResidentialMelbourneAustraliaFinanceSector
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Article originally posted at: https://theurbandeveloper.com/articles/research-reveals-capital-city-apartment-values-plummet