New apartments decrease in value?

Is it normal for new apartments to decrease in value and sell below purchase cos say 10 years later because of depreciation etc?

 

Its a question of supply and demand. How many buyers vs. how many sellers. Too much supply, prices goes down. High demand relative to supply available, prices go up.

A side note: My understanding is that a brand new apartment may have a GST component to be remitted back to the government. Apartments 5 years old or older won't.

 

GST is one factor, development margins are another. It takes time for these to wash through the system.

Ever bought a new car and compared price with a resale of a similar car but a year older?

 

have looked at some apartments that are less than 10 years old and the sale price in most cases is less than the price paid new, was told its common as new apartments you can claim the depreciation on them for a certain number of years?

 

It is nothing to do with depreciation. It is to do with the fact that at the time of purchase, buyers pay more for brand new than a similar second-hand property. It then can take up to 5-10 years for organic CG to cover for the developer' profit margin that the buyer paid this premium for.

As BAs we have purchased a number of 10 yr old properties for less than or equal to what the seller paid 10 years ago. This is jut one reason I am not a fan of buying brand new or OTP.

 

if buying in the peak of the market, and while there are consistently oversupply of same type of properties, minimal population growth, nil infrastructure improvement, no job growth over the years, ppl can see lower price drop.

 

Depreciation is often touted as the biggest and best reason to buy a brand new property, but it doesn't really seem to come up nearly as much once the property is a few years old. I don't think unit values have much to do with remaining depreciation at all.