In sobering news for off-the-plan investors, new research has revealed more than half of new apartments bought in Melbourne and then re-sold in the last five years have been re-sold at a loss.
In the Sydney and Brisbane markets, older apartments are achieving significantly more growth than the off-the-plan investments.
In Melbourne, the BIS Oxford Economics research found the average aggregate loss for off-the-plan buyers worked out to be 2.7 per cent.
That compared to a 7.4 per cent gain made by those who bought established apartments.
Carlton, West Melbourne and Docklands were the worst three performing suburbs for off-the-plan sales, with losses hovering around the 6-8 per cent mark.
Prahran and North Melbourne were the next worst performers, with aggregate losses sitting at around the 3-4 per cent level.
Buyer agent Miriam Sandkuhler from Property Mavens told Domain that the figures proved property prices are based on land value, not building value.
“When investors buy off the plan, they are paying a premium which includes the developer’s profit,” she said.
“In many instances, investors can even lose money due to increases in oversupply of similar stock in the area.”