Unfortunate buyers of off the plan apartments in Brisbane are selling at losses of up to 36 percent.
The Australian reports that most sales this year in high-rise apartment towers in Hamilton, Bowen Hills and Fortitude Valley which were built about five years ago, occurred at a loss.
The heaviest falls were a $152,000 plunge from an original price of $522,000 for a Hamilton two-bedroom unit with river views; a $150,000 decline on a smaller two-bedroom unit in the same complex; and a $145,000 loss on a $400,000, 60sq m unit in Bowen Hills.
This comes after an unprecedented building boom over the last 5 years creating a massive oversupply of high rise apartments.
It seems that price drops of 20 to 25 per cent are not uncommon for resales after off-the-plan purchases.
Landlords are also suffering
The oversupply is also causing desperate landlords in Brisbane to resort to desperate measures to secure tenants.
Typically you’ll receive a month’s free rent with your 12 month lease.
But other landlords are offering an iPad, a free gym membership or a gift voucher your moving costs to secure tenants.
One large Fortitude Valley developer was offering 3 months free rent and $1,000 cash to tenants who took a 12 months lease.
Some more details:
The Australian reports that all the 2016 and 2017 sales in the Riverside Hamilton building failed to make a profit.
Instead they ranged from an 8.7 per cent fall in off-the-plan price (a loss of $35,500) to a 29 per cent decline (a loss of $152,000).
In the nearby Hamilton Harbour building, a two-bedroom, one-bathroom apartment sold this year for $115,000 less than its off-the-plan price of $485,000, a fall of 23.7 per cent.
The only profitable sale of a dozen this year was of a property that was sold by the developer with a rebate, and made less than $10,000.
At Bowen Hills’s The Green, the three sales this year were at losses of more than 25 per cent of the original prices paid.
In Fortitude Valley, two resales have occurred in the Brooklyn on Brookes apartments, both at a loss.
In the Watermarque complex in Hamilton, losses on the three resales this year were at a maximum of 5 per cent.
Just look at the skyline and you’ll still see cranes everywhere.
More than 5,300 apartments have been completed in the inner city of Brisbane this year, and there are another 11,000 being built.
If all the building contracts were fulfilled, new supply across the city for apartments and townhouses could grow to 15,650 in the next 12 months and 39,420 in the next two years.
But it’s likely with the current oversupply, some new projects will be deferred and moving forward development approvals have dropped more than 50 per cent.
While the median unit price in Brisbane fell 2.3 per cent in the June quarter, house prices are still rising.