Two stories in The Australian caught our attention this week. The first article revealed that rents for Brisbane apartments have fallen by between 10 and 17 per cent in the last six months as the market has been flooded with new unit developments.
Overall, the city’s off-the-plan sales have dived to their lowest level since 2011, with just 272 transactions in the last quarter, a 13.7 per cent fall on the previous quarter.
Another piece by Robert Gottliebsen says Melbourne too is facing a looming apartment crisis. There, around 15,000 apartments are due to settle around June 30. Two-thirds – mostly larger developments – are owned by major Asian institutions or funded by the big Chinese banks who are in it for the long-haul.
Investors left scrambling for cash
But the other 5,000 smaller developments were bought by local and Chinese investors about three years ago. Many purchased several units as all that was needed on each was a 10 per cent deposit.
Their plan was that when the settlement was due, they would sell the extra unit at a profit – and pay off the remaining apartment.
But the units have not risen in price so they will need full funding – and the banks are no longer lending. Gottliebsen says that local banks have dropped the amount they will lend to locals wanting to settle while Chinese investors can’t get funding here or from home.
The result? A lot of apartments coming onto the market in both cities – and owners who will be keen to sell.
Not good news for investors – but for mums and dads looking to downsize? The next 12 months could be the time to do it.
