NO CAPITAL GAIN FOR MAJORITY OF APARTMENT PURCHASERS

According to market analysts two out of every three high rise apartments purchased off the plan during the last few years have achieved no financial gain. When existing owners of apartments fall into negative equity, property developers become a liability for lenders. When a real estate bubble bursts, everybody loses, unemployment skyrockets, businesses fail and recession invades. Off-plan purchasers could be out of pocket by as much as twenty percent when their deadline for settlement becomes due and payable.

Lender’s revaluation

of apartment prices is resulting in many purchasers unable to meet the shortfall between the reduced mortgage, and the purchase price.

Analysts are predicting that the fear of not getting out is about to take hold and that apartment listings in Melbourne and Sydney could flood the market.

We are building the slums of the future. Public confidence in higher density housing is quickly being eroded by the poor quality of construction and governance. Residents are being sent a very clear message that normal rights and regulations do not extend to those who live in higher density housing

Almost half of the apartments in Sydney’s troubled Opal Tower are still vacant, nearly four months after the building was first evacuated on Christmas Eve.

This means only 90 apartments have been resettled in the 36-storey Olympic Park building since late February — 169 of the tower’s 392 units remain empty.

Meanwhile apartment owners across the country are stuck with maintenance problems that never get fixed plus having to find the money to pay for illegal cladding removal which they had nothing to do with. In addition there other expenses that sellers would like to redeem, such as body corporate fees, legal fees, stamp duty.

In addition, the Australian Labor has confirmed it will not back down on its policy to abolish negative gearing for new investors wanting to buy existing properties if it wins the federal election.

This was despite the latest figures revealing that housing prices are expected to fall at a similar rate to that which occurred during the global financial crisis, according to property analysts. It will certainly make the apartments cheaper at the expense of current owners who could lose everything as a consequence.

Member of Mary Drost’s Planning Backlash wrote:

“With respect to the downturn in the property market – I absolutely believe that a significant and contributing factor is buyer rejection – see the link below to the article I wrote in Feb”.

“I’m also absolutely convinced that lenders have two fears 1) the number of mortgage holders that will default; and 2) being stuck with sub-standard apartments and townhouses to try and sell in order to recoup their funds – especially as many have been so poorly constructed and will be lucky to last a decade, let alone two”.

I challenge the awesome power of the heads of department!

“I used to work with the staff of Portland, Oregon University who managed to get Polystyrene banned from the State. When  returned to Melbourne. I contacted our Victorian EPA and I got a smart young fellow who knew about the dangers of polystyrene and polyethylene installations and he passed his findings on to his superiors. However his superiors didn’t heed his counsel. The problem is the heads of departments who have an awesome power that goes practically unchallenged. And it begs the question, why don’t the heads of department heed the counsel of their research officers? The other problem is that the politicians a re traditionally obliged to take the advice of those same powerful heads of department. So until we get politicians who show REAL duty of care  and seek independent and transparent counsel we will continue to get dangerous housing”.

The national general manager of building inspection company Roscon, Sahil Bhasin, told the ABC it estimated the certification changes could quadruple the number of building rectification orders issued in Melbourne.

Banned Cladding Systems:

“The majority of second-storey dwellings in all the outer suburbs are built from expanded polystyrene,” Mr Bhasin said. “If you have a look at other places like Sydney’s outskirts, they would also be affected.

“Unless these products can get a certification through another certifying body quite quickly then there’ll be thousands more building orders that will be issued.”

Mr Bhasin said the changes could also cause havoc for a cladding audit in Queensland. “Queensland has been doing audits based on the combustibility of products,” Mr Bhasin said.