Units in high rise buildings are selling for up to $150,000 less than the vendors paid
Apartment owners in havens for high-rise units are realising their properties are worth less than they paid for them as rampant oversupply and falling demand send real estate values plummeting.
Recent sales figures indicated multiple unit owners made a loss on their investments, with some apartments in high rise buildings selling for up to $150,000 below what the sellers paid.
Such sales were particularly prevalent in construction hubs such as the suburbs of North Ryde and Rosehill, near Parramatta.
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The suburbs were among the few Sydney areas where average prices have fallen below what they were in 2014, according to research from CoreLogic.
Median unit prices in the suburbs were 2-5 per cent cheaper than they were five years ago.
Median prices in other suburbs with a high supply of new units such as Hillsdale, in the Botany area, and inner west suburb Lewisham were below their 2016 levels, along with Zetland and Kellyville.
Suburbs with such deep drops in prices remained rare considering real estate values skyrocketed in the years between 2013 and 2017.
The average Sydney home has lost about 15 per cent of its value since the market peaked in July 2017, but home prices in most regions still remain about 30 per cent higher than what they were in 2013.
Recent loss making sales included three units sold in a North Ryde building complex on Allengrove Crescent.
All changed hands within the last three months for more than $120,000 less than what the sellers paid in 2017.
A unit on nearby Delhi Rd sold for $55,000 below what the vendors paid, while another apartment on Network Place went for $44,000 less.
CoreLogic research analyst Cameron Kusher said prices were dropping because demand for units was falling behind supply in areas with high construction levels.
The Mascot Tower crisis, where residents had to be evacuated over warnings of dangerous cracking, would likely lead to even further caution from would-be unit buyers, Mr Kusher said.
“Caution was probably there already due to settlement risk for off the plan buyers and rents have been falling, which has discouraged investors,” he said.
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Mascot Towers disaster drives shift away from units
Detached house developer Thrive Homes general manager Patrick Eather said his company was getting increased inquiries for houses since the Mascot Towers incident.
Many were buyers originally planning unit purchases, he said. “They’ve changed their minds after watching the Mascot Towers issue unfold, and so soon after the Opal Tower issues last Christmas.”
Demand for detached houses has not fallen as far, which has been reflected in recent auction clearance numbers.
There were close to 500 auctions this week across Sydney, the majority houses, and 72 per cent sold successfully under the hammer, according to preliminary figures.