‘Pockets of risk’: Sydney suburbs where homes are reselling for less than the owners paid

A mix of Covid-era forces have taken a heavy toll on property values in some Sydney areas and sellers have had to accept up to $200,000 below the prices they paid.

Apartment sellers in Sydney’s high-rise suburbs have been haemorrhaging money during the Covid-19 pandemic, with close to one in six accepting lower prices than what they paid.

It comes as housing experts revealed apartment oversupply and a depleted pool of willing buyers due to closed borders made units in high-rise pockets a hard sell.

These issues were compounded by falling rents and rising vacancies, which deterred new purchases by investors – traditionally the dominant market for high-rise products.

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A CoreLogic report showed the biggest losses were in the high-density Parramatta, Strathfield and Botany Bay local government areas.

About 15 per cent of sellers in these areas made a loss despite a widespread boom in the rest of the Sydney housing market.

This one-bedroom unit in Olympic Park recently sold for $540,000, $211,000 below the 2017 price.

Median resale losses over the March quarter – the latest with available data – ranged from $25,000 in Botany to $50,000 in Parramatta.

Some sellers lost significantly more, with one vendor in Sydney Olympic Park, part of the Parramatta LGA, recently accepting a price $211,000 below what they paid for their one-bedroom unit in 2017.

The unit was located in a building near the 36-storey Opal Tower, which was evacuated in 2018 due to fears of dangerous cracking.

Other high-rise regions where sellers were struggling included the Sydney CBD and the council areas of Cumberland, Burwood and Ryde.

About in one in 10 sellers in these areas traded for a lower price than they paid, with CBD sellers losing an average of about $75,000.

CoreLogic head of research Eliza Owen said it was clear the housing boom wasn’t being felt everywhere.

“There are still pockets of risk in the Australian housing market, despite a broadbased upswing in values,” she said.

Select Property Group research director Jeremy Sheppard said sellers in high-rise markets were struggling because developers built too many units.

A unit in this Broughton St building in Parramatta sold off the plan in 2015 for $719,000 but resold in 2021 for $640,000.

Multiple units in this Olympic Park building on Australia Ave have sold for a loss for the vendors.

They had also grown overly reliant on selling to foreign buyers in the years preceding the Covid-19 outbreak, he said.

“Developers have been trying to cram as many apartments as they can onto their sites but now that the international purchasers have dried up there’s a real problem. It’s classic oversupply,” he said.

Local buyers may have also been discouraged by widespread reports of faulty construction such as in the Opal Tower and Mascot Towers in the Botany LGA, Mr Sheppard said.

“There have been issues with construction quality in Sydney,” he said. “It’s only a small number (of buildings), but it weighs heavily on people’s minds. Many will see it as too risky an investment.”

MEDIAN RESALE LOSSES BY LGA

(Amount lost by unlucky sellers)

Strathfield $25,000

Parramatta $50,000

Botany Bay $38,500

Burwood $20,000

Cumberland $57,500

Ryde $53,500

Sydney CBD $75,000

Originally published as ‘Pockets of risk’: Sydney suburbs where homes are reselling for less than the owners paid