05/02/2018 Apartment prices cut and buyer incentives boosted as developers struggle to sell | afr.com

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Feb 5 2018 at 9:59 AM

Updated 51 mins ago

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Apartment prices cut and buyer incentives boosted asdevelopers struggle to sell

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With supply in abundance, developers are getting creative to sell Melbourne apartments. Rebecca Hallas

Sellers are lowering prices on high rise inner-city apartments by

up to 10 per cent, advisers are being offered $10,000 commissions

to recommend apartment sales, builders are adding 'free' luxury

fixtures and lenders are including new incentives – on top of

record low rates – in a bid to revive flagging residential property

markets, analysis of market offers reveals.

Some off-the-plan apartments are being revalued by lenders before final settlement

by up to 15 per cent lower than their original purchase price, causing credit problems

for buyers before they finalise their deals, according to mortgage brokers.

Lenders' black ban on apartments less than 50 square metres is creating problems for

developers, who are holding onto them rather than resell at discounts that might

lower prices for apartments in the same complex, and forcing resellers to reduce

prices, brokers claim.

by Duncan Hughes

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05/02/2018 Apartment prices cut and buyer incentives boosted as developers struggle to sell | afr.com

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Major lenders, such as National Australia Bank, are offering 50,000 bonus Qantas

Points as part of their Choice Home Loan Package.

Lenders and developers are using various incentives to boost demand in response to

lower sales volumes in capitals around the nation following another weekend of

sluggish demand and low sales volumes. 

Several property specialists believe apartment sellers in some capitals, particularly

Brisbane and Melbourne, are facing falling demand and over-supply.

JLL, global investment and property consultancy, said Melbourne's property market

is facing  "tough conditions with a lot of headwinds" that will cause apartment prices

to fall by up to 5 per cent and housing to flatline.

Melbourne developers completed about 10,600 apartments last year and there are

76,400 in the pipeline, according to JLL analysis.  Economic and population growth

will support longer term growth, it concludes.

Greater Brisbane is on course for an oversupply of new houses and apartments in

2018 with corresponding house price falls, new forecasts by property research group

SQM Research showed.

Property groups, such as Kokoda Property, are offering mortgage brokers, financial

advisers and accountants $10,000 bonus for every sale plus generous rebates on

stamp duty and other incentives.

For example, $1.5 million apartments in Ashwood, which is about 14 kilometres south-

east of Melbourne, are being offered 3 per cent stamp duty and free blinds.

Other luxury inclusions include marble kitchens, Miele appliances, timber flooring

and high ceilings.

Buyers of a three bedroom apartment in Mordialloc, which is about 24 kilometres

south-east of Melbourne, selling for $990,000 are being offering 12 month rent

guarantee at 5 per cent and free blinds.

Other new apartment complexes in Melbourne's inner south-east are being sold with

'free' blinds and 12 month rental.

Louise Lucas, chief executive of The Property Education Company, a mortgage broker

and buyer educator, said investors being recommended apartments for their self

managed super funds should carefully consider prospects for capital gains with

income and likely costs.

Ms Lucas said: "The most important questions you know everyone should ask a

financial planner, accountant or mortgage broker who refer them to an 'off the plan'

purchase is how much commission are you receiving. Even if it shows in the fine print

better,  make them disclose it in words - then you are more likely to see them choke."

Steve Lusi, a director of Direct Property Group, said a lender crackdown on small

apartments under 50 square meters is also slowing demand and reducing prices for

developers and sellers.

He said the asking price for an apartment in Melbourne's inner-city South Bank is

being reduced by 10 per cent from $315,000 to $285,000.

Small apartments generate bitter rows between governments, developers, planning

authorities and residents in the ongoing debate about affordability versus liveability.

ING Direct has reduced minimum sizes for city apartments it will finance by 20 per

cent to 40 square metres. The apartments are typically for owners that commute to

regional homes on the weekend.

Attractive terms available

For Lease

Expressions of Interest

For Sale

05/02/2018 Apartment prices cut and buyer incentives boosted as developers struggle to sell | afr.com

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But rival international bank, Citi Australia, is toughening borrowing terms for higher

density apartments, which is believed to be any unit development containing more

than 30 apartments.

Mr Lusi said quality apartments in popular prestige eastern suburbs, such as Toorak

and South Yarra, remain in demand from owner occupiers and investors.

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