Nearly half of all new units in Sydney and Melbourne that settled last month were priced lower than their original value, according to a report from the Australian.

Data from CoreLogic showed that 45% of new apartments that settled in Sydney had valuations below their off-the-plan purchase price— up from 18% in 2018.  Melbourne, meanwhile, recorded that 46% of its new apartments that were sold for values less than their initial price. The number was double the level reported at the same time last year.

The trend was brought about by the drastic change in the condition of the country’s two largest markets, according to Tim Lawless, head of research at CoreLogic.

“For units that were bought off the plan two years ago, so much has happened. There are fewer investors, fewer foreign investors and it’s harder to get finance,” he told the Australian.

Business Insider Australia reported that unit prices in Sydney have dropped by 7.8% in the previous year, while Melbourne’s median prices have fallen by 3.7% over the same period.

In the latter part of 2018, CoreLogic cautioned that the record new unit supply in these markets, together with tightened financing conditions and declining prices, might result in “heightened” risks for those looking to settle on their property purchase.

“Off-the-plan buyers who find their valuation comes in lower than the contract price at the time of settlement could be in for a rude shock. Lenders will generally be looking for a loan-to-valuation ratio of at least 90%, more often closer to 80%, meaning their deposit will need to be at least 10% and potentially closer to 20% of the property value. If the valuation comes in lower than expected, the buyer may need to top up their deposit in order to meet the lenders loan-to-valuation criteria,” Lawless said.

Lawless also predicted that a peak in settlement activity would happen over the next two years after the completion of construction. Currently, there is a large number of units under construction in Sydney and Melbourne, as well as Canberra and Adelaide.

Policymakers at the Reserve Bank of Australia (RBA) also acknowledged the risks.

“Tighter lending standards could amplify the downturn in apartment markets if some buyers of off-the-plan apartments are unable to obtain finance. This could lead to an increase in settlement failures, further price falls and even tighter financing conditions for developers,” RBA Deputy Governor Guy Debelle said in a speech last year.