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Apartment buyers left in debt as Aussie banks 'pull plug'

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  • Apartment buyers left in debt as Aussie banks 'pull plug'

    Up to 5000 apartment buyers could be left tens of thousands of dollars in debt after borrowing deposits for unbuilt units they cannot get the remaining funds for.
    Martin Dunn, of estate agency City Sales, said Australian banks had "pulled the plug" on the New Zealand apartment market and were refusing to give would-be buyers the remaining 90 per cent for their mortgage.
    Dunn said this had occurred to "unsophisticated investors" who had purchased Auckland central apartments off the plans at property seminars, often "on the spot".
    They had been granted loans to pay for their deposits but when they had gone back to their banks to seek the remaining money they had been turned down.

    City Sales was attempting to sell off many of the apartments on behalf of the worried buyers.
    "We have an alarming stop in the supply of new apartments in a market where we can't keep up with growth," he said.
    "It's not appetite that's causing this to stop it's because banks are withdrawing all their funding from building them."
    A lot of the investors had not been aware that the banks had withdrawn from supporting the apartment market.

    "We're already getting a few alarmed what I call - without wanting to be unkind - unsophisticated investors who are saying to their banks, 'We've bought this apartment in Auckland and settlement's coming up in January, we're going to need the whole lot'. And the banks are saying, 'You must be joking'."
    City Sales had resold about nine such apartments in the last month.
    "It's a bit of a warning shot to people that things have just changed on a dime," he said
    Most of these people would have paid $50,000-$70,0000 10 per cent deposit with the expectation the bank would provide the remaining 90 per cent.
    "We've got a bit of a train smash coming up," Dunn said.

    Thousands of people could be left heavily in debt after borrowing for unbuilt apartments.

    -----
    I think it's great news.

  • #2
    Scum bankers ... happy to accept giving the deposit funds knowing full well the buyers will come for the rest in a certain timeframe ....and the Damn NZ Govt talks up apartments as affordable first homes to kiwi utter BS ...

    Comment


    • #3
      Not the banks' fault. The situation has changed so the banks have to adapt in response to the fall in credit availability. This is what you signed up for.

      Comment


      • #4
        Unfortunately that is one of the risk of buying of the plans. You need to be 100% certain that you can settle when the time comes.

        Also it is a risk(gamble), there is no guarantee the apartment or secton will be worth more than you paid for it, by the time title is available. In good times, buyers can do very well and have done in last 2-3 years, but times do change.

        Maybe a lot of these buyers were a bit to greedy and took too bigger gamble!

        Ross
        Book a free chat here
        Ross Barnett - Property Accountant

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        • #5
          with the recent price rises

          pretty sure they can all get out with a little profit
          have you defeated them?
          your demons

          Comment


          • #6
            Originally posted by eri View Post
            with the recent price rises

            pretty sure they can all get out with a little profit
            Haha until people start reading stuff like this in the Herald, and then you watch the buyers dry up!

            And then in a year's time, savvy investors will pick them up for 2/3 of their off the plan price.
            Squadly dinky do!

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            • #7
              Originally posted by Davo36 View Post
              Haha until people start reading stuff like this in the Herald, and then you watch the buyers dry up!

              And then in a year's time, savvy investors will pick them up for 2/3 of their off the plan price.
              Another scaremongering puff piece from Anne Gibson.

              This whole story is based on wildly speculative stats and anecdotes and seems to be talking about investors only, nothing to do with normal owner-occupiers. As you say a "savvy" investor may pick it up for 2/3 of the plan price.. from "non-savvy" investors. My heart bleeds
              Last edited by donna; 24-09-2017, 11:24 AM.

              Comment


              • #8
                Originally posted by bmt View Post
                Another scaremongering puff piece from Anne Gibson.

                This whole story is based on wildly speculative stats and anecdotes and seems to be talking about investors only, nothing to do with normal owner-occupiers. As you say a "savvy" investor may pick it up for 2/3 of the plan price.. from "non-savvy" investors. My heart bleeds
                Well she is quoting Martin Dunn.

                But then I wonder if he has an interest in a lot of desperate sellers heading his way.
                Last edited by donna; 24-09-2017, 11:25 AM.
                Squadly dinky do!

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                • #9
                  I'm surprised they got the finance in the first place, the banks will only loan 60% on apartments. Hasn't this been in place for a long time now?

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                  • #10
                    ^

                    think it's a little more nuanced that that

                    differnt banks, different requirements, off-the-plan, bigger apartments etc

                    the lending officers want to lend, think there are commissions involved

                    but they have to stick with the banks ever changing rules

                    so a yes this month

                    can be a no next

                    if it wasn't in writing
                    have you defeated them?
                    your demons

                    Comment


                    • #11
                      Originally posted by tim360 View Post
                      I'm surprised they got the finance in the first place, the banks will only loan 60% on apartments. Hasn't this been in place for a long time now?
                      Can go up to 80% for off the plans investments. The issue is largely on affordability requirements changing moreso than LVR limits (though those will have an impact in a lot of cases)
                      Your Home Loan - Wellington Mortgage Broker
                      [email protected]

                      Comment


                      • #12
                        It's probably why so many OTPs go to offshore buyers (particularly in Aussie) where they're getting their funding offshore. Many years ago we bought an OTP and it too valued up less than it's expected valuation so we had to cough up an extra $15K at settlement (we were lucky we had one unit there were quite a few others who had bought 3 or more and they were being stung on late settlements etc). Plus the rental appraisal was way off so the deal was negative for years. The marketing is so slick and it's easy to get sucked into these deals esp. for Kiwis who are too trusting - I guess it's still the same now.

                        cheers,

                        Donna
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                        • #13
                          Hmmm, yep, they make them seem like a sure bet. And an easy, do no work bet. You know, it's all brand new, so no reno/maintenance as well as easily rented etc.
                          Squadly dinky do!

                          Comment


                          • #14
                            city sales

                            sending out another email

                            Unusual market conditions have left us with a multitude of apartments
                            which aren’t able to be publicly advertised, but are seriously for sale.


                            guessing more OTP buyers

                            wanting-needing

                            to cash out
                            have you defeated them?
                            your demons

                            Comment


                            • #15
                              I contacted City Sales and they have told me about a couple of apartments where the buyers want to onsell. In the SugarTree development.

                              Are these any good? What is that development like? Positive, negatives?
                              Squadly dinky do!

                              Comment

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