The top danger zone suburbs Sydney and Melbourne

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Broadbeach Waters, Qld., Oct. 6, 2021 /Medianet/ --

The top danger zone suburbs Sydney and Melbourne  


Unit supply risks 


The top 10 danger zone suburbs in Sydney and Melbourne property at the moment are all areas where units are oversupplied.  


Pete Wargentthe co-founder of Australia's first national property buyer's agency network BuyersBuyers, said there had been a 'race for space' over the past 18 months, sending house prices higher, but unit prices in some high-supply areas look riskier. 


Mr Wargent of BuyersBuyers said, "although demand has dropped sharply given the absence of international students and other visitors, there are still some areas with a high volume of potential new units in the pipeline over the next couple of years."  


"The danger areas aren't limited to the CBD but are rather found where there are clusters of new developments", Mr Wargent said. 

Doron Peleg, founder of RiskWise Property Research, said that unit supply was a factor landlords need to be wary of. 


Mr Peleg said, "we have compiled our top 10 danger zone suburbs in Sydney and Melbourne where investors should be wary about the risk of rental vacancies, and capital loss, particularly investors consider new or off-the-plan purchases" 


"The CBD areas of the capital cities have been a risk area for some time, but in Sydney, the risks are spread quite broadly across the city, from Liverpool to the inner-south and Zetland, and up to parts of the Central Coast, such as Gosford" Mr Peleg said.  


Figure 1 – Top danger zone suburbs in Sydney 


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Mr Peleg said, "in Melbourne, the higher risk areas have been more concentrated in the inner suburbs, and we have warned about a number of these locations for a couple of years now."  


"We have seen high vacancy rates around Docklands, the CBD, the inner south, and other parts of inner Melbourne for some time. However, with interstate migration to Queensland also taking its toll, we have seen double-digit declines in unit rents for inner Melbourne" Mr Peleg said.  


Figure 2 – Top danger zone suburbs in Melbourne 


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Pete Wargent of BuyersBuyers said that investors have turned their attention to houses over the past 18 months, reflecting an understanding of the risks. 


Mr Wargent said, "established units can still be solid investment in supply-constrained areas, especially the in the largest capital cities, but it's 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" 


"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", Mr Wargent said.  




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