Three Brisbane suburbs in top 10 unit hit list as lenders balance oversupply concerns

first_imgBrisbane city is yet to regain its sparkle in lenders’ eyes. Picture: AAP Image/Steve PohlnerTHREE Brisbane suburbs have made the top 10 for suburbs that lenders still consider high risk because of oversupply concerns.Fears of a “race to the bottom” in an oversupply situation have lenders worried that investors will be forced to drop rents to lure tenants in off-the-plan units in certain suburbs.Brisbane city, Fortitude Valley and South Brisbane were among the top 10 suburbs that were still considered high risk because of the number of units coming on-stream, according to a report by RiskWise Property Review.According to the report, Brisbane city was expected to see 3201 units coming online in the next 24 months, while the Valley was to have 1040 and South Brisbane 2145.“If we look at the top 10, it’s no surprise to see several city centres listed — particularly Brisbane, which features prominently on lenders’ blacklists,” it said. “In 2017, over 5300 units were completed in Brisbane, with another 11,000 in construction. What we’re currently seeing on the market is a lot of incentivised advertising, from offers of full furnishings included, through to a free car on settlement.”New South Wales was in a worse position with four in the top 10 — Zeland which has 2332 units coming online in the next 24 months, Epping (2460), Holroyd (3184) and Schofields (1389). The other three were Adelaide city (1720), Southbank in Victoria (2212) and Perth city in WA (1151).It warned that “unlike a straightforward property handover, off-the-plan investors must be able to attain finance approval after construction is complete, and if the market has sunk during the build period, they are fronting the mortgage on an overvalued property”.It warned that when hundreds of identical off-the-plan dwellings come online simultaneously, “it can be a race to the bottom as investors drop rents to lure in a tenant”.The report said despite all the concerns, the unit market continued to grow with over 315,000 units have been approved for construction across the country in the next two years.More from newsParks and wildlife the new lust-haves post coronavirus20 hours agoNoosa’s best beachfront penthouse is about to hit the market20 hours agoFive signs to watch for:1. Poor economic growth: “Areas with weak economic growth underperformed the national benchmark, delivering an average 5-year uplift of 10.4%”.2. Oversupply and high proportions of new units: “A high proportion of new units in a relatively small area shows a strong correlation with poor capital growth”.3. Houses versus units: “Off-the-plan units are weaker investments than new house builds in the same suburb.”4. Middle-ring units versus inner-ring units: “Inner-ring demand doesn’t extend to units”.5. Renter ratio: “Houses and units purchased in suburbs with a renter ratio lower than 50 per cent delivered 5-year growth of 41.6 per cent. Where the renter ratio was higher than 70 per cent, we saw an average 22.3 per cent growth in the same time frame”.(Source: RiskWise Property Review)last_img

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