A growing number of unit owners in Sydney’s new high-rise buildings have been losing money when it comes time to resell as the fallout from dangerous building defects continues to drag down prices.
Close to a quarter of apartment sellers in crane-laden Mascot and surrounding suburbs Zetland and Waterloo exchanged their homes for less than they paid, with the biggest losses surpassing $200,000, sales figures from the past three months revealed.
A similar proportion of vendors were making losses in Homebush and neighbouring suburbs Sydney Olympic Park and Wentworth Point.
Losses were concentrated in these areas because of recent reports of cracking and flammable cladding issues in nearby buildings such as Mascot Towers and Olympic Park’s Opal Tower.
The incidents discouraged some home seekers from buying in high-rise blocks at a time when listing figures pointed to a mounting oversupply of units, housing experts said.
CoreLogic head of research Tim Lawless said the increased supply and lower demand was pushing down prices and leaving unit owners in a dangerous position.
“The recent examples of construction defects and cladding issues across the high rise apartment sector will be weighing down buyer sentiment,” he said. “We can see this reflected in weaker resale prices on newly built stock.”
Recent off-the-plan purchasers were in a particularly precarious position, Mr Lawless added.
“Considering the high level of supply and reduction in values, many buyers are likely to experience a settlement valuation on their property that is lower than the contract price,” he said.
This risk was greatest for those who bought high-rise “investment grade” units, typically two-bedroom homes, in city pockets where there was still a long pipeline of new apartments in the works, Mr Lawless said.
These areas included Sydney’s inner south and the Waterloo-Beaconsfield region just north of Mascot, where a mammoth 1600 units remained under construction, despite there already being a glut of units currently for sale.
Close to 1000 units were also under construction in Mascot itself, while in the Homebush Bay region there were almost 1300 in the works.
Propertyology head of research Simon Pressley said unit owners in some high-rise areas may not be able to ride out current conditions in the hope they will improve and those who waited for a rebound were running a major risk.
“The best treatment is most likely to sell sooner rather than later,” Mr Pressley said, adding that “same-same, mass-produced Lego buildings” did not have a history of strong growth in prices.
Units sold for some of the biggest losses over the past three months included a three-bedroom apartment on Stromboli Strait in Wentworth Point in the Homebush area.
The vendors had paid $1.56 million for the 242sqm apartment in 2016 but recently resold it for $1.26 million, a loss of $260,000, CoreLogic records showed.
Multiple units on Lachlan St, Gadigal Ave and McEvoy St in Waterloo sold for $170,000 to $190,000 less than the vendors paid in 2015 and 2016.