Buyer beware: Australia’s top 10 suburbs suffering unit oversupply

Expect to see more rental vacancies in these top 10 Australian suburbs Source: Getty

Mum and dad investors have been warned to rethink where they are injecting their money into property in Australia, with the latest list revealing those suburbs that are tanking due to unit oversupply.

RiskWise Property Research and property buyer’s agency network BuyersBuyers have unveiled the top 10 risky suburbs, with New South Wales and Victoria headlining the danger zones — snatching three places each on the list.

Schofields in Western Sydney took out the dubious honour of first place with 3397 new units slated for the next two years, which represented 115.7 per cent of existing stock, followed closely by Rouse Hill, 43km north-west of Sydney’s CBD, with 2155 units representing 88.2 per cent of existing stock.

Western Australia’s Subiaco posed the third-highest risk, with 1798 units representing 46.4 per cent of existing stock.

Other Australian suburbs at risk over unit over-supply include:

  • Box Hill, Victoria (1833 – 25.5 per cent)
  • Gosford, New South Wales (1619 – 28.2 per cent)
  • Footscray, Victoria (1531 – 27.5 per cent)
  • Perth CBD, Western Australia (1276 – 6.5 per cent)
  • Broadbeach, Queensland (1244 – 12.5 per cent)
  • South Melbourne, Victoria (1056 – 21.1 per cent)
  • Adelaide CBD, South Australia (964 – 9 per cent)

BuyersBuyers co-founder Pete Wargent cited the absence of international students and other visitors behind the sharp drop in demand, but remained cautiously optimistic, suggesting buyers shouldn’t avoid investing in units altogether, according to a report by 7News.

“Established units can still be a solid investment in supply-constrained areas, especially in the largest capital cities,” he said. “It is generally the rising land values that deliver the returns in Australian real estate, so units in boutique blocks with a high land-to-asset ratio and a point of scarcity value tend to fare best.

“On the other hand, there tends to be more risks in generic high-rise of higher-density developments. There are many uncertainties about the return of international migration at present, and therefore the risks of buying a new unit are even higher than they normally are right now.”

Meanwhile, the saying “as safe as houses” may indeed prove to be true, with several recent reports revealing Australia’s housing boom shows no signs of abating.

2GB radio host Ben Fordham recently hit out at reports that suggested Baby Boomers might be responsible for the current housing crisis.

Meanwhile, a report in Starts at 60 yesterday outlined how new rules from the Australian Prudential Regulation Authority (APRA) regarding the amount banks can lend borrowers, may slow down the current boom but may not be enough for house prices to drop.

Did you invest in the unit market? How is it performing for you?

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