PHOTO: Much of the inner city’s new apartment supply is being built in the Waterloo-Zetland area.

Nearly a third of Sydney’s newly completed units are now worth less than what their buyers will have to pay for them.

Many of the homes were purchased at inflated prices agreed during the housing boom two years ago but dropped in value as the market slumped over the time it took to build them.

To add to the pain, buyers now face an uphill battle to pay the full purchase price since lending policies are preventing banks from issuing mortgages that exceeded the market value of homes.

Without a large enough mortgage to cover the full contract price, the buyers would have to cover the shortfall with additional savings or be forced to surrender 5-10 per cent deposits already paid to developers.