120 Aussie suburbs could be set for a price plunge

Concerns of oversupply and a slowing property market have led one of the country’s leading banks to list 120 suburbs across Australia that will be subject to special lending conditions.

Despite a weakening in demand, more than 210,000 units are expected to be built within the next two years in Melbourne and Sydney alone, according to CoreLogic RP Data figures.

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While developers continue to argue that the property boom for newly built apartments will not cause a substantial oversupply, Macquarie bank disagrees, drawing up a list of risky locations for apartment gluts.

In a confidential memo sent to brokers last week Macquarie Bank said it would demand a 30 per cent deposit on units in these high-risk areas from May 23, the Australian Financial Review reported.

The list includes 20 Sydney postcodes, 15 in Victoria and more than 40 locations in Queensland.

High density postcode listing across Australia's three major cities

POSTCODE	SUBURB	STATE
2000	Barangaroo, Dawes Point, Haymarket, Millers Point, Parliament House, Sydney, Sydney South, The Rocks	NSW
2001	Sydney	NSW
2002	World Square	NSW
2003	-	NSW
2004	Alexandria, Eastern Suburbs MC	NSW
2006	University of Sydney	NSW
2007	Ultimo	NSW
2017	Waterloo, Zetland	NSW
2138	Concord West, Liberty Grove, Rhodes	NSW
3000	Melbourne	VIC
3001	Melbourne	VIC
3004	St Kilda Road Central	VIC
3005	World Trade Centre	VIC
3006	South Wharf, Southbank	VIC
3007	-	VIC
3008	Docklands	VIC
3009	-	VIC
3141	Chapel Street North, Domain Road Po, South Yarra	VIC
3205	South Melbourne, South Melbourne DC	VIC
4000	Brisbane, Brisbane Adelaide Street, Brisbane GPO, Spring Hill	QLD
4001	Brisbane, Central Plaza, Riverside Centre, Waterfront Place	QLD
4002	City East, Wintergarden	QLD
4003	George Street	QLD
4004	Spring Hill	QLD
4215	Australia Fair, Chirn Park, Labrador, Southport, Southport BC, Southport Park	QLD
4217	Benowa, Bundall, Bundall BC, Bundall DC, Chevron Island, Gold Coast MC, Isle of Capro. Main Beach, Surfers Paradise,	QLD
4218	Broadbeach, Broadbeach Waters, Mermaid Beach, Mermaid Waters, Nobby Beach, Pacific Fair, Q Supercentre	QLD
4870	Aeroglen, Barron Gorge, Brinsmead, Bungalow, Cairns, Cairns Central, Cairns City, Cairns DC, Cairns MC, Cairns North, Cairns Orchid Plaza, Earlsville, Earlsville BC, Edge Hill, Freshwater	QLD

In Melbourne, the areas listed by the bank as high density include Southbank, Docklands, South Yarra and the World Trade Centre district.

In Sydney, the CBA and surrounds, Ultimo, Barangaroo, Haymarket, Dawes Point, Millers Point and The Rocks are all classified as 'risky', as are Rhodes and Parramatta over in the west.

Meanwhile, Surfers Paradise, Cairns Central and Brisbane are all listed as high-risk areas in Queensland.

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“There is the concern that there is a little too much development going on there and people should be wary,” Corelogic RP Data analyst Cameron Kusher said.

Kusher also said that the bank is trying to get ahead of the game by curbing the risk of devaluation as a result of oversupply.

“Macquarie is trying to be in front of the risk, a lot of (the new stock) is being bought by investors and as banks change policies about lending to investors, some will have trouble settling,” he said, according to the Australian.

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“With so much stock coming onto the market, the properties won't increase in value between being bought and being completed, so the person who settles on it is underwater from the start.”

But Domain Group’s senior economist Andrew Wilson argued that by raising the percentage of deposit buyers need upfront Macquarie may only exacerbate risk in those suburbs by denying them finance.

While one lender has taken the cautious approach, another major bank has taken advantage of this surge in apartments and has opened the door to investors.

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Westpac Bank has announced it will reduce deposits required for investor loans to 10% from 20%.

The Reserve Bank also plays down talk of a glut.

“If supply and demand are equilibrating without massive changes in prices, that sounds like a market working,” RBA governor Glenn Stevens said.