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Recently we have seen even more lenders placing further restrictions on ‘off the plan’ purchases. The most recent lender was Bankwest who altered their ‘off the plan’ policy to place increased lending restrictions on these types of properties. For off the plan purchases in high density areas, lending has been reduced based on the following Loan to Value Ratio’s (LVR’s) up to:
- 70% LVR for certain locations in Sydney and Perth.
- 60% for all other locations in high density areas.
When banks are restricting lending through their policies, around a type of property, it is sending a clear signal that the prospect for value growth is unlikely. Whilst this is just one lender, there is a constant and consistent trend in the marketplace where lenders are restricting lending to high density, off the plan purchases. This should ring warning bells for clients thinking about purchasing these types of dwellings. This is in an environment where over supply of property is continuing, as new buildings are going up at record rates.
Thankfully we have been educating our clients of these risks for over a decade now.
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