10 regions you should not invest in Australia
The Australian real estate market has had a difficult period last year. Especially in the capitals, falling real estate values put the market into a troubled period. Some experts say some regions in the country are still too dangerous for investors …
RiskWise Property Research has announced Australia’s most dangerous areas for investors. The report explained the regions that are particularly at risk of excessive supply.
Three NSW and Australian Queensland suburds entered the list of regions that should not be invested. Adelaise is ranked 11th in the list. Rouse Hill in NSW, which ranks at the top of the list, accounts for more than 300 percent of the available stock of additional units on the market.
Norwest comes second place in NSW. Zetland, which entered the list one year ago, was the ninth this year. RiskWise CEO Doron Peleg said “Add to that tighter lending standards, the results of the Royal Commission, political uncertainty, a sharp drop in dwelling commencements and Labor’s proposed taxation changes if elected, and you have the potential for major disaster.”
He added: “A number of markets across Australia are already experiencing weakness and the introduction of these taxation reforms will hit them hard. Also increased scrutiny of residential property loan applications and restrictions on foreign investors have led to a significant reduction in investor activity and changed the market landscape and consumer sentiment.”
Bill Nikolouzakis, the newly appointed CEO of the company iBuyNew, says the city homes have become more popular.
Mr Peleg said in the saturated Brisbane unit market the story was much the same with rising defaults on settlements, huge price reductions and over-the-top incentives and discounting to get buyers across the line.
According to Peleg, there is a high level of stock in these regions, and high stockpiles are at risk.
He said while there had been a reduction in dwelling commencements there was still a high level of stock that needed to be absorbed and this meant the area remained high risk.
Mr Peleg told while unit oversupply was the main cause for an area being high risk (more than 263,600 units have been approved for construction across Australia over the next two years), other factors included, in some cases, poor economic growth and also that demand in the inner-rings did not extend to units.
“It must also be remembered that rental units and owner-occupier units are not fully substitute products. The dwelling types and needs of owner-occupiers are often greatly different from the dwelling types and needs of renters,” according to Peleg.
Peled continued his explanation as follows.
“Units that are used by owner-occupiers are larger than units that are typically used as rental properties and, more importantly, the price per square metre of rental properties is higher than the price per square metre of owner-occupied properties, especially in Sydney and Melbourne. This means that, overall, rental units in Sydney and Melbourne are significantly less affordable than units that are owner-occupied.
“All this added up suggests that if the proposed changes to negative gearing and capital gains tax take place it is likely to put off-the-plan units at their highest risk ever and this includes equity risk, cashflow risk and settlement risk.”
Source: news.com.au, rıskwıse
Sevdenur Demir / [email protected]