An interesting article appeared in “ The  Australian” last Friday written by highly regarded financial commentator Robert Gottliebsen. In it he points out what he thinks will happen to the “off the plan” apartment market. Well researched, it refers a number of factors which he believes we will see the effects of in 2017. It is well worth a read.

We have for a long time now we  been advising investor… clients not to buy “off the plan” apartments as we believe they are not a good investment for a number of reasons. Gottliebsen says “underneath all the cranes a drama is taking place because there has been a substantial change in the Sydney and Melbourne markets”.

He points out that changes to lending rules introduced by banks and governments mean that many Asian buyers cannot settle which has the effect of immediately reducing prices in the secondary market.( that created when a buyer cannot settle and forfeits the deposit. The developer holds the deposit from the off the plan deal and then  on-sells the apartment at a lower price . Down come prices!)

If the trend continues Gottliebsen says it could have a devastating effect on the economy. Builders soon will be required to follow new rules introduced by the State Government which will substantially increase the cost of building and therefore reduce the number of apartments being developed. If building stops so does the economy.

 

Ph: 0418 500 483

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