Crystal Balls to fortune tellers: What will happen to the apartment market?


What an oversupply might look like

Meriton’s Harry Triguboff has been quoted as having faith in the Sydney apartment market after it was announced that Meriton had purchased the balance of the Little Bay project in Sydney. He also expects apartment building to fall up to 33 percent over the next 18 months. Two sides of the coin but what does it mean for those trying to buy an apartment and when or where should they go?

There’s no doubt that the East coast bargain hunter’s delight is Brisbane, where there is a well-documented oversupply and the lifestyle on offer is a siren’s call to those in chilly Melbourne or overpriced Sydney. There was never a bubble in Brisbane, as prices didn’t boom. But how much more will prices soften?

Sydney on the other hand, still has a stubborn reluctance to admit to a 5 to 10% drop over the last few months. Only last weekend, half of the 131 apartments on offer in the $389million Castle Residences Towers were snapped up in one morning, encouraging agents to remain bullish.

Melbourne has lost much of it’s Chinese investor spend and the inner city has an acknowledged over supply while outer suburb can’t meet the demand. The thing to fear is the self-perpetuating reluctance to buy in once the domino effect moves down the coast from Brisbane through Sydney to Melbourne.

Robert Gottleibsen points out in the Australian that once the urgency goes out of buying in, the spiral down continues. Add to that the mortgagors who lose jobs due to the downturn in construction and you really could have a recession nobody wants to have.

(sculpture by Thomas Kuebler) Over a mill? Tell him he’s dreaming

What is the answer for the apartment buyer who is ready to move now into the market? There is no certainty that’s for sure. You can never count on short term capital gain and if you don’t have a big enough deposit, can end up with negative equity and in strife if you lose your job and can’t pay the mortgage. Your call… and Madam Zelda probably knows as much as the experts!

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Category: Live, New Developments, News, Strata Living

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