In order to meet the demand of overseas buyers for apartment projects, the development of apartments has reached an unprecedented scale in recent years, the situation of supply exceeds demand has been effectively eased, so the increase in housing prices tends to slow down. The low interest rate policy only stimulates the demand, and the real solution lies in the development of the real estate by government. Once the supply can keep up with the increase of the demand, the house price will naturally be in a healthy and stable state of operation.
There is a lot of discussion about hot spots for real estate investment, and an Australian real estate expert points out that there are more than 20 urban areas in Australia where house prices have fallen and investors need to be vigilant.
Mr. Porter (Anna Porter), founder of Suburbanite, a real estate valuation and analysis firm, analyzed data from property data firm CoreLogic as of November 2017 and came up with a report. In her report, she listed 24 risk areas for investors across Australia to avoid.
In these investment-at-risk areas, the prices of villas and apartments have declined by varying degrees, and in some state-run cities apartment prices have fallen by a staggering rate of nearly 50%. In this report, the decline in apartment prices in some parts of Sydney is not as strong as in other state-run cities.
Porter points out that in the new state, Brookville (Brookvale) and Granolli (Glenorie) have a lot of false propaganda. In fact, prices in Brookville's apartment market fell 9.8%, while Granolli's villa fell 8.3%.
In addition, a similar situation exists in the eastern part of Melbourne. The price of apartments in the eastern part of the country, which is CBD-wide and popular, has also fallen 15 percent, as a result of oversupply. The good news for Victorian investors, though, is that the worst performers in the housing market are in remote or rural areas, where investors are less concerned.
In the five years leading up to the first half of last year, reports of surging demand for apartments in Sydney, including a number of other cities and regions across Australia, were often reported in the press. But last year, there was an oversupply of apartments in some Australian cities and urban areas, outpacing population growth. Many real estate research institutes, financial and advisory agencies analyse data, believing that as a large number of apartments are newly completed, this will hit home prices, and the risks to investors are also increasing.
According to the Australian SQM Research Real Estate Institute, in Sydney's urban areas of Zetland, (Zetland), Yiping (Epping) and Scofield (Schofields), and Brisbane, Melbourne's Southbank, Perth and Adelaide's central business district, The number of newly built apartments is on the rise, and the risks investors face are increasing. In this case, the money-holder purchasing investors will have to think twice.
Mr. (Doron Peleg), chief executive of Riskwise, a research consultancy, said a large number of apartments were nearing completion in many parts of Australia, followed by an unprecedented surge in housing construction. But the type of completed property in some urban areas is not in line with local market demand, and there is a huge risk. In addition, due to more stringent loan policy restrictions, check-in may be affected.
(Fortitude Valley) of Ford Valley and South Brisbane of Holloyd (Holroyd), Brisbane in west Sydney are on the list of risk zones for consulting firms. According to CoreLogic, a property data analysis firm, the number of completed apartments in Ford Valley is expected to be 1040 over the next 24 months, while Holloyd will have 3184; new apartments have risen sharply as a percentage of existing apartments.
Mr. Pileger said Yiping in the northern part of Sydney is an example; other parts of the north are similar to Yiping in other parts of the north.
"the northern part of Sydney is mostly family-centric, with strong demand for homes in the last five years. They need more two-bedroom apartments to meet the housing needs of small families. But we have to see, according to Yip Ping's demographics, many residents are looking for bigger houses, three-bedroom apartments, even across the northern part of Sydney. " Said Mr. Pileger.
In this case, says Mr Pileger, problems arise when so many new two-bedroom apartments emerge in one area. And new buildings have a premium, and when people have money in their hands, they look for other types of property, and they have more options.
Several sets of data from SQM Research show that urban areas such as Holloyd have already had high vacancy rates, in which case it is difficult to digest further the number of new properties.
While home prices are falling in some areas where there is a risk of oversupply, such as Brisbane and Perth, which appear on the risk list, it should be noted that not every urban area is bound to see a similar situation.
Another thing you can't ignore is loan restrictions. Sustained macro-prudential measures will dampen housing loans. Lenders are tightening their lending to investors amid concerns about oversupply of high-rise apartments and regulatory pressure to limit the growth in investment loans.
Victoria's faster-than-expected population growth has eased the oversupply of Melbourne apartments and reversed previous market expectations. But excessive return-on-investment risks remain in the market because peer-to-peer lending restrictions are at work.
The tightening of loan restrictions has slowed the pace of high-rise buildings.
In a report from Citi in the second half of last year, several analysts at Citi predicted that (APRA), the Australian prudential regulator, would be more effective than before in cooling the housing market and would combine it with other market factors. "as supply continues to catch up with demand, there may be some adjustments given tight home valuations in Sydney and Melbourne." Report forecast.
But Mr Pileger said there was no need to adjust prices, but the combination of the risk of delivery and long-term problems would value it below the contract price.
He explained that the current lending model showed that many banks would implement lending requirements below the investment lending targets set by the Australian prudential Authority in the second half of this year. This will bring banks back to lending and encourage investors to return to the market. Buyers are hesitant to enter the market, but some cannot wait long.
He believes that bank lending restrictions relaxed to do rite encourage investors to re-enter the market. "demand will start to rise because they will see a very hot rental market and house prices will rise again," he said.
There are also warnings from research agencies that it is dangerous for apartments to continue to be completed and put on the market without proper infrastructure. Apartments need to be combined with public transport and good communities in order to upgrade the city brand and make thousands of apartments more livable; conversely, creating a large number of homes without a community is a risky act in itself.
Although there are different views and forecasts on the direction of the housing market, overall, the industry is predicting a slowdown in the housing market in 2018, which will also be a challenging year for Australia's banking sector.
Some of the urban areas investors should avoid
New state
The most urban areas in the new state are listed on the risk list, a total of 6. In the apartment market, (Olympic Park) at (Narooma), Brookville (Brookvale), Olympic Park in Naruma and (Turramurra) in Talamara were at risk, falling 19.8 percent, 9.8 percent, 2.3 percent and 4.6 percent, respectively.
Victoria state
Three cities in Victoria are on the list. The risk in the apartment market was that prices in Ron (Lorne) and (East Melbourne), in East Melbourne fell 37.1 percent and 15.5 percent, respectively.
Kunzhou
Kunzhou has four districts to be wary of, with all but three falling house prices, while Tilina (Telina) is the city where apartment prices have fallen, by 32.9 percent.
South Australia
Eastwood (Eastwood) in South Australia was the city where apartment prices fell by 28%. In addition, the price of villas and apartments in Mansfield Park (MansfieldPark) fell by 3.9 percent and 8.4 percent, respectively.
Western Australia
Crowley (Crawley) 's apartment price fell by 46.2%.
Capital territory
The price of Downer's (Downer) apartment fell by 39%.
Tashoun
Investors need to be wary of the state's downtown (Trevallyn), where apartment prices have fallen 25%.
Northern Territory
The price of apartments in the (Marrara) district of Malala fell 18.8%.
The five-year boom in Australian property has attracted more investors to the property market, hoping to get a share in the housing boom. And the rapid rise in housing prices will not only cause overvaluation, but also lead to more speculation. Many buyers, under the condition that they cannot afford it, see that the current lending rate has been cut one after another and the lending environment is relaxed. So in order to obtain more capital gains and then risk entering the real estate market ahead of time, house prices are now falling. In the face of rising interest rates, they will be exposed to default risks due to insufficient supply of funds, all of which require investors to focus on.