Urban apartments in market 'free-fall'

22 May 2004

Raine & Horne's midweek auction results for Sydney's exclusive eastern suburbs show just nine of the 31 properties listed for auction were sold - less than 30 per cent - and of those, four were priced above $1.6 million.

Of those not sold on Wednesday and Thursday night, nine were withdrawn from sale due to lack of buyer interest.

Ray White sold only three of the nine properties listed for sale in Bondi on Wednesday night.

Experienced property economist Akis Haralabopoulos, from Alpha Economics, said prices in inner Sydney were being smashed by the combined effects of two interest rate rises, the Carr Government's new 2.25 per cent tax on investment property and an oversupply in apartments.

"The fact most of the properties that sold were priced at over $1.6 million highlights the fact the market is suffering a serious correction," he said.

"Prices of apartments close to the CBD are going to add a new meaning to the term free-fall - they could fall as far as you like - and they have a while to go yet."

Mr Haralabopoulos said he knew a developer who approached an agent about dropping the price of apartments in a large-scale luxury development by an average of $100,000 each - and the agent said "they still wouldn't sell".

Property owners in the suburbs and regional areas such as the central coast and the Illawarra region were less likely to be stung, because most owners were not investors and would not be prepared to sell their properties for less than they paid, he said.

Ray White chief auctioneer Tony Fountain said many agents had not adapted to the new market conditions.