The places not to invest in
Vacancy rates in areas affected by mining such as Gladstone have risen significantly in the past two years. Source: Supplied
WHILE demand for real estate might be hot in many suburbs, investors are being warned against buying in Australia’s most oversupplied markets.
According to property analyst Terry Ryder of hotspotting.com.au many investors will end up getting burnt once all proposed stock is built and they can’t find a tenant prepared to pay a decent rent.
He has come up with a list of the top ten markets to avoid and five markets to treat with caution. Half of the markets he advises against investing in, are in Queensland.
SECOND PROPERTY OWNERSHIP EXPLODES
BARGAIN SUBURBS WHERE SELLERS DROP THEIR PRICES
A boom in the mining industry in Moranbah saw demand for property skyrocket before it dropped. Source: Supplied
TERRY’S TOP TEN MARKETS TO AVOID:
Brisbane inner-city, Qld
Emerald, Qld
Gladstone, Qld
Gracemere, Qld
Hunter Region, NSW
Mackay, Qld
Melbourne inner-city, VIC
Moranbah, Qld
Perth inner-city, WA
Port Hedland, WA
The Gold Coast unit market is one to still treat with caution, according to Terry Ryder. Picture: Jono Searle Source: News Limited
FIVE MARKETS TO TREAT WITH CAUTION:
Canberra, ACT
Darwin CBD, NT
Gold Coast Qld
Mudgee, NSW
Sydney inner-city, NSW
Source: hotspotting.com (listed in alphabetical order)
The unit market in Perth is already in oversupply, according to Terry Ryder. Source: News Corp Australia
Mr Ryder says supply is the factor most overlooked by property investors, but it can have a significant impact on how their investment performs.
“If high population growth was the core element in a good locational choice, the leading capital growth performers in the past five years would have been the Gold Coast and Wyndham City in the southwest of Melbourne,’’ he said.
“The opposite is true in those markets. The forgotten factor is often supply.’’
The unit market in Melbourne is oversupplied according to Terry Ryder. Source: Supplied
He says the two current “danger situations’’ in the market are inner city apartment markets and regional centres where a rise in supply coincided with a drop in demand, as is the case in many coal mining areas.
Mr Ryder says that is why Queensland is over represented in the list.
Mining towns have experienced a rapid rise in vacancies and an equally rapid decline in rents and property values, as demand dried up.
“It will be some time before investors can be enticed to buy in such places again,’’ he says.
Mr Ryder says given that Melbourne, Brisbane and Perth already have major surpluses of inner-city apartments, and Sydney, Canberra and Darwin are heading in that direction.
A good strategy for property investors is to simply avoid CBD unit markets altogether.
