Investors offload empty Melbourne CBD apartments for losses of up to 40 per cent


Melbourne apartment owners have offloaded inner-city units at losses of up to 40 per cent in recent months, as some apartments continue to sit empty, a year after Melbourne first went into lockdown to slow the spread of coronavirus.


City-based real estate agents say smaller apartments aimed at university students have suffered some of the biggest resale losses but added that owners of larger, non-student apartments have also experienced substantial losses as vacancy rates in the CBD and surrounding suburbs soared during Melbourne’s extended lockdown.


John Sdregas from JMRE Real Estate in North Melbourne recently sold a one-bedroom apartment in Swanston Street for $180,000 – 30 per cent less than the owners paid for it 15 years earlier.


“It had been sitting vacant for nine months, and they simply couldn’t afford to keep it,” Mr Sdregas said.


“We are seeing this a lot,” he said. “Vendors can’t find renters. They are distressed, and they’re prepared to sell at a loss. That’s if they can find a buyer.”


“Some apartments are sitting on the market for three to six months. The investor market in the inner city has diminished. No one wants to buy an investment property at the moment,” he said.


Mr Sdregas expects the price of CBD apartments to continue to fall while Australia’s international borders remain closed.


“We don’t know how long it’s going to be until international students can come back. It could still be another six, 12, 24 months away,” he says.


“You won’t be able to give them away if you’ve got no students to rent them,” he says.


Public records reveal dozens of examples of inner-city apartments that have been sold in recent months at a substantial loss.


In November last year, a studio apartment in Carlton sold for $141,000, 38 per cent less than the $227,500 it was purchased for in 2007.


In January, a studio apartment in a high-rise building in Collins Street sold for $145,000 – 36 per cent less than the $228,000 the owners paid for it in 2004.


And there are dozens more examples. The agent who sold the Collins Street apartment, Annamaria Stella from Twigg Real Estate, says “99 per cent” of the apartments she currently sells in the CBD sell at a loss.


“Occasionally, we sell one or two that break-even, or even sell for $10,000 more than they were purchased for off-the-plan. But that is very rare,” she says.


However, Ms Stella is quick to point out that she regularly sold CBD apartments at a loss even before the pandemic hit.


She said the high vacancy rates and falling rental prices “of up to 50 per cent in some instances” caused by the closure of international borders and remote working just meant that more investors had been forced to sell.


Vacancy rates in the CBD peaked at 14.6 per cent in October but have fallen marginally in recent months, from 11.6 per cent in February to 11.4 per cent in March.


“Even before COVID hit, we were seeing a major oversupply of apartments in the city … from about early 2017 onwards, we were starting to re-sell some of these apartments that had been bought off the plan for less than what they were purchased for,” Ms Stella says.


“So, before COVID, I’d get calls from vendors who were thinking about selling for various reasons, and when I’d tell them what their property was worth, they’d say, ‘oh, no way, I’ll hold on to it’,” she explained.


“Now they call and say they don’t want to sell, but it’s empty, and they need to sell, even though in most instances it will be at a loss.”


Ms Stella says many of the CBD apartments she has sold recently have sold for “25 to 30 per cent less than the original purchase price”.


Agents say city apartment prices have also been impacted by the large numbers of city dwellers who fled the city last year for more space in the suburbs.


Mr Sdregas believes it will be tough to lure many of them back.


“Even though more and more workers are being asked to come back into the office one or two days a week, I think many people would rather commute for those couple of days and have that bigger house in the suburb than a little apartment in the city,” he says.


While new apartment building is forecast to slow in  Melbourne next year, Angie Zigomanis, director, research and strategy at Charter Keck Cramer, says there are still a significant number of new developments due for completion this year that will continue to put downward pressure on inner-city apartment prices for some time to come.

A Charter Keck Cramer report last month revealed that 16,400 apartments were forecast for completion across Melbourne in 2021, while from 2022, “the number of apartment completions will decline significantly, with only 3200 apartments launched in new projects through 2020”.


“There are still a number of big projects reaching completion stage, and a significant proportion of those will be in the central Melbourne area,” Mr Zigomanis says.


“These new completions are just going to add to the stock of vacant apartments on the market … making it even more challenging for sellers to achieve the prices that they initially paid for them, especially when you consider they will be competing against owners who are in a position where they need to sell.”



Ref: RACHEL WELLS (on 21 Apr 2021). Investors offload empty Melbourne CBD apartments for losses of up to 40 per cent. Retrieved from


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