9 / 12
Negative Factors that Influence Property
Looking at the other side of the coin on the negative side, I think there would be pressure on prices if unemployment
began to rise, the economy weakened or mortgage interest rates increased which in turn would lead to increased
levels of supply. Reviewing more local reasons these could involve:
• New Developments; there is a multitude of factors at play when news circulates of a new development that
could cause a negative impact such as loss of views, noise and air pollution.
As previously pointed out there are many positives from new developments. From my experience new
developments always cause a groundswell of opinion within the local community, naturally owners want answers.
If a new development is going to impact an existing development’s aspect even a loss of partial views this will affect
a development’s appeal amongst buyers. One of the worse times to sell is the intervening time between hearing
about a proposed development perhaps in the press and getting to the stage of a final DA. This intervening time
makes selling hard because of so many unknown factors and sales that do take place tend to overly discount to
compensate. The fear of the unknown is in many cases worse than what actually happens.
Naturally developers submit DA’s maximising the footprint and generally creating as tall a building within the
building envelope of planning rules. In most cases, campaigns by local people, consultation with town planners
tend to result in compromise. Perhaps the proposed building is increased in height but uses a smaller floor plan,
or possibly reduced in overall height. It is usually a better outcome that what was anticipated at the onset.
There are also concerns in relation to noise and air pollution these have an impact on the day to day lives of
people and they are voiced as concerns of buyers. In my experience although these factors are real I have not
seen them impact on price. Furthermore new developments generally command much higher prices; they bring
new infrastructure and new buyers to an area that assists in cushioning the negatives.
• There is a question of overall supply which may affect prices in the future which I expand on in the outlook
however existing developments will be much less susceptible when it comes to supply compared to the many
developments coming out of the ground.
• Increasing Strata Levies or special levies introduced to pay for large expenditure items. Overly high strata
levies put off buyers. Make no mistake, when showing property to prospective buyers the question of
strata levy’s is generally either the first or second question asked by buyers. If the figure is out of line with
expectation then that is a negative mark against a development and some will discount offers accordingly.
• Defective Buildings, from time to time developments require major works. It generally ends in court between
the original developer and the resident’s executive committee. Again, it is the unknown factor of cost; how much
to rectify the issue and how much to argue the case in court that can often put off buyers resulting in a fall in
values or make selling an apartment much harder. Again those who sell early tend to have to overcompensate
on price.
Ray White has
1,000 offices in
9 countries