Off the plan apartments selling at up to 30% loss as Chinese investors struggle to settle

Discussion in 'What to buy' started by highlighter, 9th Mar, 2017.

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  1. highlighter

    highlighter Well-Known Member

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    Might become a good buying opportunity but tread carefully as oversupply is also something to consider. The exchange rate hasn't helped in the foreign buyer department as in real terms the value of Australian property has dropped over five years if you convert to RMB. Also the factor of banks unwilling to lend of non-residents.

    According to AFR:

    Buyers of some capital city apartments bought off the plan and sold within 18 months are losing up to 30 per cent of their investment, confidential analysis by the nation's largest valuation company reveals.

    The potential loss of more than $150,000 in the value of average-priced apartments not only highlights the need for buyer caution, it's causing lenders and regulators to turn the screws on developers and borrowers by toughening the scrutiny of building projects before final lending commitments are made.

    Tony Kelly, managing director of valuation group Herron Todd White (Melbourne), says tougher inspections will improve standards and reduce risk.

    The analysis tracked sales of apartments acquired off-the-plan and then resold in the market to a genuine buyer (rather than back to the developer) within 12 to 18 months. Developers have been known to buy back a property at an inflated price to prevent a lower pricing benchmark for the apartment block.

    The data reveals a fall in the resale price of 10 per cent-20 per cent. That could mean a $130,000 loss on a $650,000 apartment in 18 months.

    Stamp duty, legal fees and agent's fees could strip another 10 per cent of the buyer's capital, or a loss of $150,000 on the same apartment. These losses are compounded if the currency exchange works against the overseas buyer and additional foreign taxes are included.
     
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  2. muller23

    muller23 Well-Known Member

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    just a matter of time until this happens,now it is
     
  3. Chabs

    Chabs Well-Known Member

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    If this is happening, really hope it eventually happens in Sydney! Need some good deals on units.
     
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  4. JK200SX

    JK200SX Well-Known Member

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    Where can you find these heavily discounted units? i.e. Which website?
     
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  5. Yson

    Yson Well-Known Member

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    Is it true by over 30% n where can we find?
     
  6. larrylarry

    larrylarry Well-Known Member

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  7. teetotal

    teetotal Well-Known Member

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    At this stage there are just reports i believe. And they are created to caution people.
    Its not true until we see the FOR sale ads on RE.com mentioning this in their ads :D
     
  8. Loverenting

    Loverenting Well-Known Member

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    Show me some addresses, buildings? (in Sydney)
     
  9. Loverenting

    Loverenting Well-Known Member

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    I have been watching selling / sold prices of new built apartments around the Canterbury area, for which many predicted an oversupply of OTP units - saw no seller discount. And the post settlement prices have generally been higher than what were for the OTP.
     
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  10. Gockie

    Gockie Life is good ☺️ Premium Member

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    Reading the article shared by @larrylarry, it looks like Victoria is most at risk.
     
  11. JK200SX

    JK200SX Well-Known Member

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    So, apart from the media hype, I guess there is no evidence of discounted properties for sale?
     
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  12. Zoolander

    Zoolander Well-Known Member

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    www dot distressettlements dot com
    joking. If only there was a listings site - reaching out to the developers of those units and asking for the selling agent(s) details would be the best bet.
     
  13. r3ckless

    r3ckless Well-Known Member

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    Aren't these Chinese buyers settling with cash?

    Where are all the singles/young couples that are FHB now struggling to obtain finance because of lender restrictions!

    I feel sorry for the same singles/young couples whom already have a property or two under their belt, and when that third property being OTP settles and settlement is called upon, how will they obtain finance!
     
  14. Gockie

    Gockie Life is good ☺️ Premium Member

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    .... there's always a risk with buying OTP. ... the property you thought you bought may not be what you actually get, building defect headaches, OTP settlement risk... I think people who committed to buy a third property that's OTP... uuummmm they should know better?

    Sorry my ability to sympathise does not extend that far. My belief is that people need to think about the risks before committing.
    And at least they have an IP and or home to sell if need be as an option. Its not ideal obviously. But they do have options.
     
  15. hammer

    hammer Well-Known Member

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    Heya, I just read this article carefully and although it reads like a 30 percent fall is happening....it's not.

    When you read in depth...some apartments in Australia have dropped in value by 30 percent. These stats include Perth and Darwin....All it would take is one stupidly overpriced mining-boom OTP apartment in Darwin to have dropped by 30 percent (likely!!!) and you have your headline.

    The other part of this article refers to some Chinese buyers having difficulty finding the cash at settlement. This is true and has been documented here...but doesn't necessarily refer to the apartments which have dropped 30 percent.

    Anyway top points to the journo's for headline writing....and technically the facts in the story are all correct. Just have to be really careful in joining the dots.

    Peace out.

    H.
     
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  16. Loverenting

    Loverenting Well-Known Member

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  17. TMNT

    TMNT Well-Known Member

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    Loverenting likes this.
  18. Michael M.

    Michael M. Member

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    Certain apartments in Zetland are experiencing this issue of buyers not been able settle due to changes in lending. They are selling for 5-10% less than what they paid for 2 years ago. I suspect this is happening to suburbs will more development and density - as with the banks' blacklisted suburbs.

    Higher demand and less dense suburbs like Beecroft mentioned above will experience little or no damage since there are people eating it up due to less supply.
     
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  19. pool100

    pool100 Member

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    The last I checked, the are many lenders originating from china funds that have started to provide funding for PRC buyers. I checked with my friends in shanghai and they confirmed it. There's no panic at all.

    Other asian buyers from Singapore or Malaysia etc have no problems obtaining funding from their local banks.

    Not sure where these reports come from and whether they have checked their facts.

    Fact is - australian apartments are considered dirt cheap compared to shanghai/beijing/singapore. And those overseas are 70-99 year leaseholds vs freehold in australia. I think there'll be more upside if you ask me rather than a crash.