Melbourne apartment valuations decline 30pc
Analysis of a handful of transactions shows many apartments have failed to hold their value between original purchase and resale, typically a few years later. Reports Michael Bleby, The Financial Review
The figures are the clearest sign the apartment boom in the Victorian capital is running out of steam and could show more widespread falls if owners elected to sell. Melbourne's surge in new apartments led to predictions more than a year ago than an oversupply was likely to push prices down. As of November, the City of Melbourne had 20,000 apartments under construction, another 19,000 approved and a further 30,000 dwellings awaiting approval. Half of all new homes under construction were in the CBD, according to the city's Development Activity Monitor report.
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Date: March 29 at 1:20 AM
Published by: The Financial Review
Reporter: Michael Bleby
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Category: Australia Real Estate
With the number of apartments due for settlement ballooning, concern is rising about whether buyers will be able to pay for them, especially at a time when banks are tightening rules.
If banks value properties for less or cut the loan-to-value ratio they will offer customers, buyers will be forced to pay more at time of settlement. If they cannot pay more, they may be forced to sell into a weaker market.
The CoreLogic numbers complement separate figures compiled by valuation firm WBP showing half of 1794 properties purchased off-plan between December 2009 and August 2015 had been revalued below their purchase price.
In one case, a two-bedroom, one-bathroom unit purchased for $740,000 on 3 August last year was revalued at $600,000 – a 23 per cent discount –16 days later.