Defect crisis slams apartment sales

Why would anyone buy an apartment today? Via the AFR:

Buyer fears about high-rise apartment fires and construction risks are causing sale times to blow out by more than 60 per cent compared with a year ago, creating bottlenecks for sellers.

Lenders are also making it tougher for borrowers to buy apartments by blacklisting some postcodes, increasing deposits and lowering valuations for off-the-plan purchases.

…“Buyers are telling me they do not want to buy into anything new,” says Patrick Bright, a Sydney-based buyer’s agent. “They do not want to buy into a problem.”

Who can blame them? This is one key reason why we see the apartment bust getting worse despite wider rising property prices and the impact of the latter being very muted for economic activity:

This will see unemployment rise and risk some serous developer shakeouts:

Raising the question: how far can house prices rise without an economy?

David Llewellyn-Smith
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