Desperate families are selling housing blocks on Gumtree as they face financial ruin in the property market downturn.
Truck driver Sanghpreet Singh, 30, and his pregnant wife Reet Kaur paid $110,000 to settle a 624-square-metre block of land in Merrifield Estate in Mickleham in Melbourne’s north.
Mr Singh and buyers from the ‘victims of Merrifield Estate’ group are angry at the developers who are now offering discounted prices and rebates of $65,000, which they claim is affecting the value of their land.
There are over 1,000 blocks of land for sale on Gumtree, many of which are housing developments in the city’s emerging outer suburbs.
Truck driver Sanghpreet Singh (pictured), 30, and his pregnant wife Reet Kaur (pictured) paid an extra $110,000 on a block of land in Merrifield Estate in Mickleham in Melbourne’s north
Merrifield Estate (pictured) buyers are angry at the developers who are now offering discounted prices and rebates of $65,000, which may be affecting the value of their land
Mr Singh and Mrs Kaur are expecting their first child and paid a $40,000 deposit on a $400,000 housing block in 2017 – when prices had surged by 30 per cent.
But after the housing market crashed their home was valued at $350,000, resulting in a shortfall of $50,000 for the couple.
An extra $40,000 was added to the bill when the bank doubled the deposit and another $20,000 was needed for stamp duty.
In total the couple paid an extra $110,000.
Mr Singh now has a tenuous relationship with Merrifield Estate and wants to sell the land but can’t do so without losing $30,000 or more.
He had one potential buyer who pulled out when he realised Merrifield Estate was selling an identical block of land for $370,000 with a $65,000 rebate.
MAB Corp, which is developing Merrifield Estate, said discounted prices do not affect the value of land.
‘Purchasers have complained that blocks of land at Merrifield are now being sold at a lower price and this is affecting their valuations,’ MAB Corp chief operating officer David Hall told the AFR.
‘That this is not possible as valuations provided by their financiers’ valuers are determined by comparative sales in the catchment and that valuation practice is to exclude “off-the-plan” sales evidence.
‘In other words, only sales or re-sales of existing [titled] vacant residential lots can be used by the valuers for determining the value.’
There are over 1,000 advertisements (pictured) on Gumtree for blocks of land for sale in Melbourne, including some at Merrifield Estate
Plots of land range from the low $200,000s to $1.3 million in Melbourne while prices at Merrifield are between $254,000 and $370,000
Mr Singh had to take a month of work in January since he was ‘very stressed’.
‘I’ve been stretched out of pocket and had to borrow from my family,’ he said.
‘That’s money I could’ve invested into my business gone down the drain.’
Mr Singh said he was ‘lucky’ to settle while 40 others were not able to after cover the shortfall on top of their deposit.
Those who could not settle lost their deposits – as much as $40,000.
There are over 1,000 advertisements on Gumtree for blocks of land for sale in Melbourne, including some at Merrifield Estate.
Prices range from the low $200,000s to $1.3 million in Melbourne while prices at Merrifield are between $254,000 and $370,000.
Land title owners in other parts of Victoria like Geelong are also being affected.
Sydney buyers are not facing a similar issue due to a more stable market.
Land title owners in other parts of Victoria like Geelong are also being affected. Pictured is an advertisement from Curlewis, near Geelong