With the predicted 30% drop in apartment prices due to oversupply and the number of defaults from Asian buyers...are we likely to see a drop then flow onto house prices overall?

Marilyn. Hi. A very interesting question. There is certainly plenty of discussion around the supply level of units to come onto the Sydney market over the next 18 months or so. The impact on values due to this cannot be entirely certain, but there are plenty of experts suggesting it will have an impact. A 30% drop however would be bordering on a "crash" and I think whoever suggested this is extremely pessimistic. On the good side of this equation is that the level of construction is not concentrated in Sydney City, it is well spread across the broader Sydney area and that is suggested to cause some comfort on the valuation pressures.
The level of future defaults will also be an interesting area to watch with all lenders tightening the rules for Non Resident applicants.
Buying property should be considered a long term view. If you go back across history, there has never been a bad time to buy, provided a long term view is taken. (Every high has superseded preceding highs).
Your decision to buy should be based around your personal needs and objectives, and then if a pure investment view is your focus, an alternate strategy for other classes of assets (cash / shares etc)
If you would like to talk through options, even outside of Sydney, then I would be happy to have a chat.
Best Regards
Ken Olds
1300 ASK KEN

Hi Marilyn,

The short answer is Yes, apartment in most major cities are experiencing oversupply. Perth has been experiencing this for about 6mths already, Brisbane is feeling the pinch now as is Melbourne. Sydney is relatively insulated as the supply and demand are relatively stable, in houses but many areas of apartments are in oversupply and will drop in price, however, there are always pockets of differentiation in every city. As far as house and land are concerned, Sydney is still experiencing a shortfall, Brisbane is expected to continue to grow as will Adelaide (the slow, steady and stable city) and Melbourne is expected to be patchy. I hope this helps.

John J Maxwell
0434 544 225
Senior Mortgage Consultant
Cocalex Holistic Mortgage & Finance Consulting
john@cocalexconsulting.com.au

I think most real estate agents and mortgage brokers are expecting these liquidity issues to put downward pressure on high density units sales - the ones that have been favoured or spruiked to overseas buyers.

It does not follow on that other types of properties with different demographic buyers and renters should follow.

As expressed, real estate should be a long term investment.