UNIT PRICES FALL BY 15.8% IN THREE YEARS

Data shows widening gap between the price of apartments and established houses.

Latest from SQM Research data for the week ending 30th September, shows vendor asking prices for apartments in Doncaster (post code 3108) had fallen by 15.8% since October 2011, including a drop of 6.1% in just 12 months.  While asking prices for 3 bedroom houses had increased by 16.4% in the last year.

Post Code 3108 October 2014                             (Enlarge bottom right corner)

The unit price fall in Doncaster is similar to what is happening across Melbourne where prices fell between 7% and 12% last year.

Last month agent First National Lindellas sold

………..four two bedroom apartments in Tram Road, Doncaster for an average price of only $421,000.

The Docklands development, in Melbourne’s port precinct south of the CBD, has posted median falls of 25%,according to reports.

The price fall in Doncaster is partially due to developers including a higher percentage of smaller apartments to make them more affordable.

A higher apartment yield is also a measure to offset increased building costs and be more competitive in the local and overseas markets where most apartments are now sold off the plan.

The potential problem for off the plan buyers arises because they might have to find more money if they wish to finalise their purchase. For example if the lending authority agrees to lend 90% of the total value of the property purchased for $600,000, requiring a deposit of $60,000, but on completion the lender values it at only $550,000, the loan would be reduced to $495,000 which means the buyer wold have to contribute a total of $105,000, an additional $45,000 they may not have.

In some cases, where the purchasers cannot cover the shortfall, the vendor could allow the purchasers to pay the balance after completion or delay full settlement and find a tenant for an agreed period rather than seeking a new buyer.

 

 

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