Opal Tower debacle sends house prices plummeting in a ‘feeding frenzy of negativity’

Opal Tower disaster sends apartment prices plummeting in a ‘feeding frenzy of negativity’ – but it’s good news for those looking to crack the market

  • Experts predict Opal Tower incident will have severe impact on Sydney market 
  • The 36-storey building experienced a major cracking incident on Christmas eve 
  • Hundreds of residents unable to get into their homes after Opal Tower incident 
  • Analysts said it may reduce confidence in future off-the-plan apartment sales

Property experts have predicted the Opal Tower cracking incident may have a major ripple effect on the Sydney housing market as apartment prices plummet.

An independent report last week confirmed that the cracks in the 36-storey were the result of major ‘structural and construction issues,’ ABC News reported.  

Analysts said the incident will not only affect future sales of apartments in the Opal Tower itself but also other properties across the sector. 

Property experts have predicted the Opal Tower (pictured) cracking incident may have a major ripple effect on the Sydney market that causes housing prices to plummet

The report said 'design and construction issues' had 'probably caused' some damage to structures within the building

An independent report last week confirmed that the cracks at the 36-storey Opal Tower were the result of major ‘structural and construction issues,’

Independent property analyst Martin North from Digital Finance Analytics told the publication the debacle had reduced buyer confidence in off-the-plan developments.

Mr North said property valuers had already noticed reduced interest in off-the-plan developments and since the incident, some investors may well walk away.   

‘Forward demand was already shrinking, and there is no doubt we will see considerable slides in prices,’ Mr North said.  

But according to Ecove, the developer behind Opal Tower, what happened at the troubled high-rise was a ‘unique incident’.

Ecove director Bassam Afla told the publication he believes the incident won’t affect future sale prices at the tower because insiders know it a high-quality building.

‘When the remediation is complete and the building returned to the state it was always intended, I believe the true value of Opal Tower will be evident,’ Mr Afla said.  

Residents are still living in temporary accommodation four weeks on from when they first discovered cracks on the tenth floor

Residents are still living in temporary accommodation four weeks on from when they first discovered cracks on the tenth floor

Ecove, which has about 30 Opal Tower apartments remaining for sale, is also the developer of the upcoming 229-unit Boomerang Tower (pictured), which is 60 per cent sold

Ecove, which has about 30 Opal Tower apartments remaining for sale, is also the developer of the upcoming 229-unit Boomerang Tower (pictured), which is 60 per cent sold

However, chief economist at My Housing Market, Andrew Wilson disagrees.

Mr Wilson said along with an oversupply of apartments in Sydney, what happened at Opal Tower couldn’t have come at a worse time for the property market.

He said the oversupply of properties and general reduced interest buyer confidence in off-the-plan developments has created a ‘feeding frenzy of negativity’.

Ecove, which has about 30 Opal Tower apartments remaining for sale, is also the developer of the nearby 229-unit Boomerang Tower, which is 60 per cent sold. 

Residents of the cracked Sydney Olympic Park tower still have no timeline for when they can return to their apartments after they were evacuated due to cracking (pictured)

Residents of the cracked Sydney Olympic Park tower still have no timeline for when they can return to their apartments after they were evacuated due to cracking (pictured)

Evacuated Opal Tower (pictured) residents have been left reeling after a bombshell report revealed more than 100 apartments are unlivable while repairs are in place

Evacuated Opal Tower (pictured) residents have been left reeling after a bombshell report revealed more than 100 apartments are unlivable while repairs are in place

Opal Tower’s builder, Icon, is also behind the $148-million 412-apartment Park One development, which is due for completion in January 2020. 

Analysts believe the Opal Tower saga has the potential to have a severe impact on property prices across the country.

According to Core Logic’s latest data, there has been a 6.28 per cent price drop for Sydney apartments for the 12 months to the end of the October. 

AMP chief economist Shane Oliver said it was already known investor and buyer interest had fallen before the Opal debacle.

‘And now to add to that there’s uncertainty of the finished product – that’s going to make it so much more difficult to sell off the plan,’ Mr Oliver said. 

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