- Buyers of off-the-plan apartments are reporting that banks are revaluing their properties once the buildings are completed and only lending a lesser amount.
- "The difference between the price paid by a property buyer and the bank valuation is often high, over 20%, and the differential is spreading. Many off-the-plan purchases are made at prices significantly above true market price. On completion, it is not uncommon for valuations to come in at least 10 to 15% below the contract price." said Michael Yardney.
- The problem arises in two ways: the buyer initially pays too much and the property declines in value during the construction period.
- "As a general rule, off-the-plan will go down in value as soon as it's built." said Mr Roylance, director of iProperty Plan.
- In this situation, the lender will usually provide a loan at 80% of the valuation, not 80% of the contract price.
Sunday, July 28, 2013
Off-the-plan apartments overpriced
A story in the Courier Mail yesterday: "Bank revaluations hit apartment buyers". Some extracts: