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She said a well-supplied but underperforming market was ideal from an affordability perspective.
“We want prices to come down. We want buyers to have more choice,” she said. “That brings some risk, especially when people have taken out large loans.”
“Not only is it great for the seller if values go up and profits increase, but it’s a guarantee that if you do default on your mortgage you can still repay your debt.
“If prices fall, the risk of people being unable to repay their bank loans increases, but for buyers who have been caught in a house price downturn, it’s a good thing.”
A recent study by the Productivity Commission shows Housing would be more affordable if more houses were builtBoth the NSW and federal governments are working to boost housing supply in response to a crisis that has driven Sydney house prices and rents to record highs.
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AMP chief economist Shane Oliver said the high levels of loss-making sales in areas such as Parramatta and Burwood could be due to higher mortgage stress in those areas, particularly if owners had held onto their properties for a shorter period of time.
“These areas are all in the middle suburbs. There is more mortgage stress in these areas,” he said. “These are people who bought their homes a few years ago and are now having to sell because there are more sellers in these areas.”
Mr Oliver said these councils had a large number of housing units and were therefore at a higher risk of selling at a loss.
“The apartment construction boom that we saw between 2015 and 2019 … has ended in Sydney,” he said. “There are a lot of cranes in Parramatta and Burwood, and it’s not just in the city. The supply is more pronounced than in other areas.”
Starr Partners chief executive Douglas Driscoll said an apartment building boom in areas such as Parramatta, Strathfield, Zetland and Chatswood had impacted the figures.
Unit owners are more likely to lose money than house owners.Credit: Ben Rushton
“You wonder why these buildings are being built — is it to meet demand or because developers can get planning permission?” he said. “The market is a bit out of balance.
“Yes, we are facing a housing shortage nationally, and more so in Sydney, but building the right homes is always key. Families are unlikely to want to crowd into a one or two-bedroom unit.”
He said it was very rare for a house to sell for less than the purchase price, although he agreed that generally apartments rarely sold at a loss. There were usually special circumstances that mitigated the loss, such as the owner buying impulsively at auction, or the surroundings of the property changing, such as several new high-rise buildings being built nearby.
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Four-bedroom homes are currently the most in demand among buyers, but interest in apartments remains strong due to stamp duty concessions for first-home buyers.
“Demand for apartments is also pretty high,” he said. “It depends on where the apartment is and what the apartment is.”
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