Unfinished homes needing major work have been streaming onto the market as renovators and home builders abandon ambitious projects they started during the housing boom.
Many of the projects were works the owners undertook with the hope of making a killer profit when prices were still skyrocketing.
But with Sydney home prices now falling, many of these property owners have decided to cut their losses midway through completion.
Incomplete homes recently listed for sale included an Ermington house still requiring about $200,000 in building work to be completed, including work on the bathrooms and living areas.
An under construction house in Kirrawee is also up for sale after the owner abandoned plans to convert the existing three-bedroom house into a duplex.
Much of the home now needs to be either repaired or the duplex work continued, with some of the interior stripped down to wall beams.
In St George enclave Connells Point, a half-finished luxury home is up for sale on Murdoch Crescent requiring about $500,000 to $600,000 in additional work.
This includes a continuation of the extension the owner started and a refit of the rooms, which are currently stripped down.
Selling agent Michael Luck of Gavan Property said it was a â€œgreat opportunityâ€ for buyers.
â€œIt needs a few cosmetic touches and the extension work needs to be finished but (the seller) has done a lot of the work already. It will be a spectacular home when it is finished,â€ he said.
The sales followed the recent listing of a partly renovated house on Owen St in North Bondi, where work still needed to be finished on the living areas and kitchen.
This home in Balmain East sold for $2.95 million after the former owners abandoned plans to renovate.
A historic Balmain home on James Lane was also listed midway through a renovation, with the owner selling up after stripping down the interior to support beams.
Smartline mortgage specialist Samantha Cranny said some investors were pulling the plug ON building projects after realising their borrowing capacity had dropped.
Banks were being stricter in determining lending capacity and were being especially restrictive when assessing loans for investment purposes, Ms Cranny said.
This was partly due to pressure from the Australian Prudential Regulation Authority and also because the falling market made lending for capital intensive building projects riskier, she added.
Property Investment Professionals of Australia chairman Peter Koulizos said there was a tendency from investors to underestimate how much their projects would cost.
Investors who purchased in the heat of the boom may not have selected the best properties to renovate and only discovered later just how much work was needed, he said.
â€œMost people donâ€™t budget for renovations or building properly â€¦ there are a lot of hidden costs,â€ Mr Koulizos said.
â€œThe fact that theyâ€™re selling before they can complete the renovation means they will be losing money on the sale. Half-finished homes sell for a fraction of what finished homes do.â€
Aidan Devine, realestate.com.au, 18 May 2019