Property investors or home-buyers looking to purchase a unit apartment this year should look into certain areas in Australia earmarked for growth – but side-step others.
According to RiskWise Property Research CEO Doron Peleg, there are a few suburbs around Australia that home-buyers should turn their backs on due to an incoming influx of new apartments being built.
NSW property investors should side-step Gosford, Mascot and Rouse Hill, while Victorian buyers should give Clayton, Docklands and Box Hill a miss.
If you’re looking to buy a home in Queensland, don’t hedge your bets on Surfers Paradise or Fortitude Valley, while those in the Northern Territory should avoid Darwin.
“It is hard to convince prospective buyers that this is the best investment they can make when there are plenty of other options available,” said Peleg.
Areas such as Sydney’s Mascot and Olympic Park have not only been hit with oversupply but also affected by reputational damage from the highly-publicised structural issues found in Opal and Mascot Towers that resulted in evacuations.
Apartment prices fell 4.6 per cent in Mascot and 9.3 per cent in Homebush West, according to Domain’s latest House Price Report, and apartment sales dropped by 75 per cent after the Opal Tower scandal.
“What we are seeing is that new units in high-supply suburbs either resulted in a loss or underperformed the market, even during periods of strong price increases,” he said.
“The recent downturn is not the major factor in those losses – even ignoring the recent downturn and then recovery, they are still materially underperforming the market.”
At one and the same time, approvals of high-rise dwelling approvals are rising the same time as the risk of buying off-the-plan apartments.
“The point is the risks are very tangible, they have been realised and we have witnessed major price reductions in a number of areas with oversupply,” Peleg said.
So what should investors do if they want to build equity?
“Simply invest in existing properties that are suitable for families in high-demand areas.”