Apartment developers are in trouble and they’re going to extreme lengths to get you to buy.
Adelaide-based property developer, Flagship, is the latest developer offering to pay your utilities and Strata bills for two years if you buy a one- or two-bedroom apartment from its $85 million development based in the CBD, according to realestate.com.
Construction for Adelaide’s new high rise, ‘Penny Place’, is set to begin later this year.
All 152 new apartment-owners of the 24-storey building would be eligible for the two-year holiday from paying water, gas and electricity bills.
The one- and two-bedroom apartments will set you back between $451,000 to $680,000, according to realestate.com.au.
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Wait, we’ve seen this before
Flagship is not the first developer to offer such a deal, but just one of many.
EG Developments, the developer for Flour Mill in Summer Hill, NSW, is also offering a similar incentive, covering council rates, strata and community levies, and water, gas and electricity bills.
Meanwhile, Allam Property Group is offering lucky residents of more than 200 Sydney, Central Coast and Illawarra homes free mortgage repayments for a year, according to Domain.
They’re not the only types of sweeteners developers are throwing in to entice buyers.
Some residents of Mirvac, the developer of ‘The Finery’ in Sydney’s Waterloo, got a free Vespa, while Brisbane residents of Force One Developments’ The One Apartments scored a free Toyota Yaris, Domain reported.
Gannet Developments also offered residents an all-expenses-paid New Years’ Eve party.
Mirvac also operates a program that allows first-home buyers to pay their 10 per cent deposit on exchange, with 2.5 per cent paid after the first year and a further 2.5 per cent paid after the second year.
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That’s great, but are the incentives actually working?
According to Allam Property Group founder Barney Allam, they are.
He said the group is seeing a major increase in inquiries off the back of its offer to cover residents’ mortgage repayments for 12 months.
“In today’s market we think this is important; smaller offers or offers of free upgrades or furniture simply do not have the cut-through in today’s incentive-driven market,” he told Domain.
Real Estate Institute of SA Brett Roenfeldt said Flagship’s incentive was a way to get traction with buyers and was “certainly very attractive”.
“That said, it’s probably also an indication of how the market is going, because normally you wouldn’t offer that kind of incentive if there was strong demand in the marketplace,” he told realestate.com.au.
Apartment developments hit amid a cooling market
Speaking to Yahoo Finance, RiskWise Property Group CEO Doron Peleg pointed to a slew of factors that was dragging down sentiment.
“Tighter lending standards, the findings of the Banking Royal Commission, political uncertainty, fears of the potential changes to negative gearing and capital gains tax, restrictions on foreign investors, unit oversupply, and large falls in dwelling commencements, have all had a material impact on the property market,” he said.
“Sales of new apartments are, consequently, very low.”
Australia’s property market has been cooling since 2017, with house prices in Sydney and Melbourne plummeting 10 per cent or more in the year leading up to 30 April 2019.
If that wasn’t bad news enough, the Opal Tower debacle late last year created a landside of Australian apartment values, and by March this year almost half of all new units in Sydney and Melbourne that settled last month were worth less than what they were originally purchased for.
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