Great article on off the plan vs secondary market

People are losing money on these properties

I have bought a few off the plans and made great gains (benefitting from careful selection and market timing). But I very much agree with the article. In general I would be very cautious.

On the Gold Coast there are for sure going to be some off the plans that will do next decade. But no way would they, in general, outperform houses (or older walkup apartments for that matter)in prime locations.

 

The article makes an interesting point that otp in Sydney has far outpaced otp in Melbourne.. But doesn't offer any rationales as to why. Both markets are in the ascendency, etc
I think it's a combination of factors:
1. Sydney has geographic restrictions - not as much for Mel. Melbourne is relatively flat and can build in most directions.
2. Sydney has a more significant unaffordavility problem compared to Melbourne (salaries are about the same.. Maybe 5% less yet prices for new and established stock is clearly more than 5% in Sydney - like for like property)
3. Sydney has less options to choose from eg point 1 above
4. Sydney has more stronger demand than Mel especially jobs
5. Foreign investment in RE is probably more in Sydney than Mel (don't have figures but wouldn't be surprised if this is the case
6. Residents are more willing to live in apartments and otp in Sydney than in Mel.
....
Overall, I think the supply issue is most confronting with Melbourne otp and why its otp will underperformed that of Sydney.