Negative equtiy

Bruce Warburton, a director at Greg Hocking Real Estate, told AFR Weekend: "We're seeing this a lot, often where the vendor has bought the apartment through an investment channel or through a spruiker.

"The worry is for vendors with negative equity who are forced to sell. When they sell they crystalise that loss. When they own it, with the current low interest rates they can hide that loss and rental return is still good," he said.

Another problem for vendors who are selling is the drop in the volume of buyers.

"This has fallen dramatically," Warburton said. "In Albert Park [a blue-chip Melbourne suburb], we have had about 160 open-for-inspections and about 1000 people coming through. In the city, over the same period, we've had 24 open for inspections and about 32 views.

Some Docklands apartments are being sold for 24 per cent less than their off-the-plan purchase price HARROWFIELD

"It's a one-offer market," he said.

Average loss of 9.4 per cent


Evidence of falling apartment values was identified broadly by valuation firm WBP Property Group last year. The firm conducted a research study on off-the-plan sales following a growing number of transactions falling short of purchase price at time of settlement.

The study, which included 1794 off-the-plan sales in Victoria between December 2009 and August 2015, found that half of all off-the-plan properties were valued at a minimum of $1000 less than the purchase price with the average loss being $40,000 or 9.4 per cent.

In Central Melbourne, the fall was greater at 11.5 per cent.

Apartment asking prices are down 24 per cent in some instances

"In real terms, this loss equates to the cost of a typical deposit, which most people take several years to save," said WBP Property Group chairman Greville Pabst.

In one extreme example, a two-bedroom apartment in Abbotsford suffered a loss of $623,000, a decline of 46 per cent.

Andrew Lean from Pagan Real Estate is selling an apartment in the Lacrosse Building in Docklands with an asking price of $225,000 to $250,000. It was bought off-the-plan for $295,000 in December 2010.

"The off-the-plan market is a bit of a false market because you have the stamp duty savings and depreciation for investors," Lean said. "When it's re-sold its real market value is based on other comparable properties in the market."

In the case of the Lacrosse building values were also impacted by a fire in 2013 which caused damage to about 100 apartments in the 23-level tower.