Melbourne / Sydney Cbds Blacklisted

Melbourne / Sydney Cbds Blacklisted
An Editorial By Phil Anderson - Tuesday November 8th

 

One of Australia’s biggest banks has shown real concern for the
Melbourne and Sydney CBD property markets by adding them to a
recently released “black list”. When banks start making it harder for
their customers to take out loans, things must be getting serious.
Here’s why these markets are telling banks, and property owners, to
stay away.

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In what has come as a shock to some, this blow to “prime” real estate markets in some of the countries largest capital cities is just fueling an ever growing bonfire of concern surrounding the foundations of the high rise unit market.

It seems the days of requiring just 10% for a deposit in former “reliable” inner city suburbs are numbered, with the National Australia Bank having announcing a so called “Black List” of more than 600 towns and suburbs across Australia. NAB has restricted the lending requirements to property buyers in these areas due to the rapidly rising concerns in these markets, with banks being reluctant to add inner city units to their books.

I hate to say it, but I’m far from surprised. This is just one of the big warning signs I am seeing appearing on the horizon for our local property markets, which i have been sharing recently with those attending my property seminars. I have been warning investors of the escalating risks the rapidly growing unit oversupply situation has been showing us for almost 18 months now. Many of those who have been coming along to listen to these free information nights have been very thankful they did.

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To purchase within these regions, NAB will now demand a deposit of as much as 30 per cent to qualify for loan eligibility. This list included many inner city suburbs in Brisbane, Sydney and Melbourne, where those wanting an apartment will, at a minimum, need to supply a 20 per cent deposit.

In short, the banks are trying to protect themselves, and by demanding 30 per cent in some of these listed locations they are also sending a pretty strong message in the process.

The message is they aren’t willing to add these types of properties to their books with out a buffer zone should values fall.

This will undoubtedly increase the difficulty level for those looking to enter
any of these markets. With price points
at all time highs in some of these
areas, potential buyers will need to
come up with a deposit in the region of
$200,000 - $300,000 for an off the
plan unit.

And if prices weaken over the course of construction, and valuations come in at lower than expected levels, those contracted to these properties may be asked to dig into their pockets once more to fund the shortfall.

If you’re a property owner, or are considering purchasing an investment property, it’s crucial to understand all the elements that may potentially affect the future of your investment. For me, sleeping at night is the most important thing… and we do that by selecting reliable, growth markets around Australia, reducing risk with research and identifying quality performing regions for our customers.

Please come along to one of our complimentary information evenings specifically designed for investors. Seats are limited, so to reserve your spot, click here now.

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