Developers are offering special deals like paying 12 months of a buyer’s mortgage, $50,000 “bonuses” and even furniture vouchers in a bid to help clear Sydney’s apartment glut.
- Analysts say the deals are common in an over-supplied market
- But they warn buyers to be wary that the apartments may be overvalued
- Sydney apartment prices dropped by 6 per cent over the past year
An oversupply of apartments, falling property prices and restrictions on foreign investors mean developers have turned to targeted social media campaigns in a bid to lure customers.
St Trinity Property Group is advertising 12 months’ mortgage free on its “luxury apartments” in Blakehurst, 20 kilometres south-west of the CBD.
In another advertisement, Arden Group says it will pay the stamp duty for buyers of its Elora The Hills development, in the north-west of the city.
Belle Property International is offering up a $15,000 Freedom Furniture voucher for its apartments and another, Tailor’s Walk in Botany, is advertising a “$50,000 bonus”.
Property analysts say the deals are common in an over-supplied market such as Sydney, with 54,000 new apartments built in 2018 and 2019 expected to be up for grabs by the end of the year.
SQM Research chief executive and property analyst Louis Christopher said developers would do anything to avoid reducing the asking price.
“If they do that [reduce the price], it will reduce the valuations on all other properties within that development, and therefore the settlement risk rises accordingly,” he said.
“So they’ll offer a free car or holiday — anything to avoid reducing the asking price.
“But buyers should be aware, that they are still paying for it in some form, and it generally comes in the form of over-valuation.”
The spotlight is on Sydney’s developments after a tower in Mascot was evacuated on Friday after cracks were discovered in the building’s beams.
Developers ‘spruiking like mad’
The State Government is in the process of overhauling the building industry, including increasing the rights of people living in strata buildings, following a report into cracking at the Opal Tower at Sydney’s Olympic Park in December.
Sydney’s median unit price in May was $678,199, with prices falling about 6 per cent over the past 12 months — less than the 10 per cent drop seen in house prices.
Yet some in the real estate industry are predicting Sydney’s property downturn will reach a floor this year — and start turning early next year — as confidence is triggered by the Morrison Government’s re-election, an interest rate cut and an easing in lending restrictions.
Property analyst Martin North from Digital Finance Analytics said the real estate sector needed a “hard dose of reality”.
“Since the election, they’ve been spruiking like mad,” Mr North said.
“But from the data I’m seeing, investors are not interested in coming on board and the demand is not coming through.”
Mr North said although average unit prices have fallen only six per cent, there were pockets of Sydney, such as Hurstville and Ryde, where the falls had been severe.
“In Ryde, unit prices have dropped more than 30 per cent, essentially something that developers can’t cover,” he said.
“What I’m interested in is why people are still taking them on — it’s quite mysterious.”
The developers mentioned in this story have been contacted for comment
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