A third of new Melbourne apartments are being sold for more than they are worth by the time construction is completed. Picture: Brett Hartwig
A THIRD of Melbourne’s new apartments are being sold for more than they are worth.
New figures from CoreLogic have revealed 34 per cent new apartments sold in the city are being valued at less than the contract price by the time they are built and the buyer settles.
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The buyer is then left to stump up the difference, or abandon the purchase — and their deposit.
But the figure is a big improvement, well below the 50 per cent settled below their original contract price two years ago.
Advantage Property buyer’s advocate Frank Valentic said while there were still risks to the market, the improvement reflected the introduction of the Better Apartment Guidelines, and developers increasingly designing projects with owner occupiers in mind.
“There’s a higher standard of apartments, there’s definitely been a shift to the size and quality of apartments,” Mr Valentic said.
“People are paying more, but it’s stacking up — the valuers are valuing them higher.”
He added that the combination were forcing an overall improvement in the industry.
“No longer can you get away with building an apartment that doesn’t have any windows in the bedrooms,” Mr Valentic said.
But with buyers still facing the risk of having to stump up the difference if an apartment was valued at less than they paid for it, a prudent approach would be to purchase the best positioned apartments in a development early — or to purchase one in a newly finished building to avoid settlement risks.
Mr Valentic said anyone considering an off-the-plan purchase should consider the pipeline of new apartments coming through for the area — as this could affect price growth.
The CoreLogic figures come as Cordell Data shows Melbourne has more than 79,500 new apartments scheduled to be finished construction in the next two years.
The inner city will be home to almost 8000 of these, while the Whitehorse area around Box Hill is set to add 4768 new apartments to its suburbs, and the Yarra region covering Richmond and its surrounds has 3856 on the way.