Investors dump Melbourne apartments at massive losses

On Tuesday we reported Domain data showing that apartment rents across inner-Melbourne have plunged by between 15% and 30%:

Melbourne inner-city apartment rents

Inner-city apartment rents have collapsed across Melbourne.

Today Domain reports that investors are growing tired of losing money and are now dumping Melbourne apartments at losses of more than 40%:

  • Smaller apartments aimed at international students have suffered the biggest losses, but even non-student apartments have been hammered.
  • One owner in North Melbourne recently sold a one-bedroom apartment in Swanston Street for $180,000 – 30% less than the owners paid for it 15 years earlier.
  • Real estate agent John Sdregas said “we are seeing this a lot… Vendors can’t find renters. They are distressed, and they’re prepared to sell at a loss. That’s if they can find a buyer… Some apartments are sitting on the market for three to six months”.
  • Sdregas expects the price of CBD apartments to continue to fall while Australia’s international borders remain closed. “It could still be another six, 12, 24 months away. You won’t be able to give them away if you’ve got no students to rent them”.
  • Real estate agent Annamaria Stella said many of the CBD apartments she has sold recently have sold for “25 to 30 per cent less than the original purchase price”.
  • The vacancy rate in Melbourne’s CBD was 11.4% in March.

Melbourne high-rise apartments were already a money pit before COVID. Now they are a financial black hole.

Unconventional Economist
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Comments

    • Every transaction has a seller and a buyer, so yes, quite a few people already caught the falling knife.

  1. SoMPLSBoyMEMBER

    Inconceivable that any Strayan RE ‘investment’ could decline by >30%!
    Isn’t ‘fair market value’ a delightful reality?
    All those leveraged SMSF’s with one illiquid asset gonna be howling to the accountants now.

    • Made mention of that to my family member. I was dismissed just short of a fist thump on the table, but assured, ..the idiots that couldn’t afford a place anyway, are being cleared out of the market, then it will boom even higher.

      When it comes to property, Australians make so much sense I pondered. A real estate agent probably told him that, or, wait a minute …. Reus, have been talking to my brother!

      Then again, being Australia, he’ll probably end up being right somehow.

      • SoMPLSBoyMEMBER

        Yep! Been ‘right’ for about 25 years that thinking!
        However, taking a bird’s eye view of Straya (and NZ) you could not make an academic case that what has happened to house prices is anything but pure idiocy and those that support what’s occurred are equally moronic. But if you’re taking the side of ‘lender profitability’ and employing the numerous pig snouts that are feeding in the debt-based river of credit, that’s another story. FUBAR.

  2. Excellent…state gov can buy them for social housing for all the newly minted highly skilled australians that can’t get jobs.