“We’ve seen the value of some off-the-plan apartments rise between 25 and 40% since they were bought three years ago, particularly in the CBD, eastern suburbs, inner west, and on the north shore, often within a seven-kilometre ring of the city,” said Ian Bennett of Colliers International.
“Now they’re coming up to settlement at the end of the construction period, people are looking at what they’re worth now and, in some cases, deciding to resell for the profit.”
The strategy, known as “Pick ‘n Flick” or “Flipping,” has been used since the first major apartment building boom in the late 1990s and early 2000s and has allowed many flippers to make small fortunes.
But with the current market being used to off-the-plan sales, five years of steady price growth have led to a fresh resale frenzy. Colliers International said that resales these days are five times more than in any previous years.
However, Harris Partners’ Peter O’Malley warned that the resale bonanza might not continue.
“As an investment strategy, it’s flawed. It’s dependent on strong price growth and, at this stage in the cycle, that looks unlikely to continue,” said O’Malley.
“A lot of off-the-plan product is priced at a premium compared to existing property, so you’re banking on the market rising between now and when construction’s completed.”