Majority of OTP apartment on settlement in Sydney and Melbourne worth less than purchase price

Majority of OTP apartment on settlement in Sydney and Melbourne worth less than purchase price
Majority of OTP apartment on settlement in Sydney and Melbourne worth less than purchase price

More than half of all recent off-the-plan (OTP) apartments in Sydney and Melbourne have been settling with a valuation below their contract price, according to the latest findings from CoreLogic.

Their data shows that 60% of OTP apartments in Sydney, and 52.9% in Melbourne are now worth less their their original contract price, based on August settlements.

In 2017 less than 16% of newly constructed NSW units were valued below contract price after they were completed.

CoreLogic's head of research, Tim Lawless, told the ABC when many of these newly completed apartments were originally sold off the plan back in 2016 and 2017, the market was very different.

"We were seeing values rising at about 15% to 20% per annum in Sydney and Melbourne," Mr Lawless said.

"Now cast your mind forward to 2019 and we've seen prices come down in Sydney by 15%. In Melbourne, they're down by about 11%.

"A lot of those off-the-plan buyers have seen a very fundamental shift in the value of the project that they purchased a couple of years ago," he added.

Mr Lawless also brought up the issue of oversupply, as well as concerns around construction quality, remediation costs and flammable cladding.

"That [is] probably also weighing on the minds of people in the marketplace and potentially affecting the resale value of those properties as well," he concluded.

Tags: 
Off the plan Sydney

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