Off-The-Plan Bloodbath

People are throwing all sorts of numbers around, if it drops 40+% just the difference in selling price will be enough to clean people out

 

If you are planning to live their for 10 years what is the issue?

Are you worried you will not be able to settle your loans?

 

The issue is that you lose money on something you can avoid or find a way to avoid...

 

Yeah potentially. I had a buffer but if valuation comes back 40+% then that’s getting really dangerous for me

 

I mean we can all **** our self of a 40% drop although it has not happened in well maybe in Sydney's history.

If market tanks that bad we are going into a serious recession or some other global event it can happen just unlikely

 

You can loose money on anything.

But the due diligence time was years ago and not now.

Now you move in enjoy your house and life. Remember you bought this as a PPOR and make family make a house a home and don't worry is hat it's worth.

If I worried about all assets like this I would never drive a car.

 

Individual properties that have been poorly purchased (e.g. OTP at market peak combined with oversupply) can drop by 30-40% while the rest of the market remains buoyed or falls far less.. just look at high end apartments in Glenelg and New Port in South Australia or some of the Melbourne developments over the past couple of decades.

 

Of-course. we can find individual properties that have both dropped and gained 40%.

That is why medians are so important it takes out the outliers .

 

While there is some substance in your post regarding Medians (removing outliers), as investors if the Medians in our more substantial markets of Sydney and Melbourne continue to fall to levels in the range of 22 to 28 percent, when properties are valued for equity releases, the borrowing capacity drops substantially. Couple this with finance being harder to secure, a possible reduction in immigration levels ( to soak up oversupply of apartments) CGT and Negative gearing implications on the horizon then the big picture doesn't appear so rosy.
I cannot see the credit squeeze loosening anytime soon.

 

So 7 out of 10 are valuing at or above the contract price even after all this tightening, all those units being built, all that foreign money drying up and all those property crash articles and 60 Minutes reports? I’d say that’s a pretty impressive result!

 

Probably the credit squeeze may be further impact by the banks assessing applications for credit card debt from the beginning of next year. From my understanding a bank is supposed to assess an applicant's ability to repay the credit card in three years. Could be awkward for some I guess.

 

I am assuming the contract prices have been reduced, so yes valuations should match up.
Would be keen to see the stats on this. Would you mind putting them up please?

 

how recent is this? I can imagine anything sold post mid 2015 would likely to be overpriced.

 

Don’t read too much into this, at full swing boom there was a lag on valuations to sale prices, many sales fell through for this reason.

 

Sept just passed apparently. Doesn’t break down the States but spoke to some REA’s in Brisbane and they’re surprised how “well” the OTP valuations are holding up.

 

With docklands, @Lizzie the purchase prices from early 2000 still haven’t seen much growth. It was a bad place to try and settle Otp and is still a bad place to invest for capital growth.

I have seen developers start to give Finance or valuation clauses in their contracts recently and another case where the developer rebated $20k for a fhb. I was surprised the lender accepted this as funds to complete.

3 out of 10 short vals doesn’t sound too bad, but momentum builds, as valuers use these distressed sales as comparables on further Otp valuations.