Effect of new developments on existing block of flats

Hi,
I am considering buying a unit in newcastle west australia. This
area is decidedly bleak however there is a nice new set of 50 units (3
story), of which around 6 are for sale.

While inspecting the property I noticed that there is a block of land
next to the units is for sale and DA approved for another block of
units. I asked the agent about this and he said the effect of new
developments on the capital value of the existing units would be to
increase it.

I would have thought that new developments may actually decrease the
price of existing units as there is a larger supply of units.

What do you guys think?

Regards,
Ivan

Re: Effect of new developments on existing block of flats

In article <>,
"Otto" <> wrote:

> While inspecting the property I noticed that there is a block of land
> next to the units is for sale and DA approved for another block of
> units. I asked the agent about this and he said the effect of new
> developments on the capital value of the existing units would be to
> increase it.

You can always tell when a sales person is telling a lie--your
clue is that their mouth is moving. Of course they are going
to say this. In reality, they have no clue. The new units might
be nicer, which brings up the overall price of the neighborhood.
They might also cause an oversupply, which could bring down prices.
One thing is for sure...as long as the builder is building new
units, your chances of selling your existing unit is near zero.
Why would someone pay your price for a used unit when they can
get a new one at the builder's price?

-john-

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John A. Weeks III 952-432-2708
Newave Communications
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