The analysis from RiskWise Property Research, seen in the table below, found the riskiest areas in the country in terms of oversupply, based not only on the supply itself but also on low demand for rental apartments in relation to that supply. 

State

Postcode

Suburb

New units next 24 months

New units next 24 months as % of units

VIC

3000

Melbourne

4,744

13.6

VIC

3008

Docklands

1,307

12.0

NSW

2020

Mascot

804

13.3

NSW

2155

Rouse Hill

1,661

200.4

NSW

2150

Parramatta

1,553

13.2

NSW

2250

Gosford

1,859

72.9

NT

800

Darwin

1,204

32.0

QLD

4101

West End

1,211

26.0

QLD

4217

Surfers Paradise

2,799

14.0

SA

5000

Adelaide

1,266

12.9

Source: RiskWise Property Research

RiskWise chief executive Doron Peleg said property investors should be extra cautious of the high degree of risk associated with off-the-plan units, which has been heightened as a result of COVID-19. 

Additionally, the equity risk has also been heightened, with investor activity lower and the media spotlight on the faults of high rise apartments increasing their awareness of the risks, increasing the risk of price reduction. 

The pandemic has also increased the cash flow risk, with SQM Research data revealing vacancy rates were at all-time high in May at 16.2%, and dropping slightly to 13.8% in June. 

Looking to compare low-rate, variable home loans? Below are a handful of low-rate loans in the market.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Extra Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
5.54% p.a.
5.58% p.a.
$2,852
Principal & Interest
Variable
$0
$530
90%
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 10% Min Deposit
  • Redraw
  • Extra Repayments
  • More details
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Quick and easy online application process.
Disclosure
5.49% p.a.
5.40% p.a.
$2,836
Principal & Interest
Variable
$0
$0
80%
  • Built and funded by CommBank
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 20% Min Deposit
  • Redraw
  • More details
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
 Disclosure
5.64% p.a.
5.89% p.a.
$2,883
Principal & Interest
Variable
$250
$250
60%
  • 100% offset
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 40% Min Deposit
  • Offset
  • Redraw
  • More details
  • Easy application. Fast approval. 100% offset.
  • Unlimited additional repayments free of charge.
  • Redraw available - Access additional payments.
 Disclosure
5.64% p.a.
5.89% p.a.
$2,883
Principal & Interest
Variable
$248
$350
60%
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 40% Min Deposit
  • Offset
  • Redraw
  • More details
  • Check your eligibility in as little as one minute
 Disclosure
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning
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Pete Wargent, co-founder of buyer's agency Buyers Buyers, said off the plan unit purchases carried a high level of risk of significant price reductions. 

"Areas with high unit oversupply carry ‘a very high risk’ and this is still a major issue in some property markets, for example in Melbourne’s CBD, while the same city simultaneously has an under-supply of family-appropriate properties,” Mr Wargent said.

Mr Peleg of RiskWise said the high-profile issues around cladding and defects has created enormous ‘reputational damage’ across the entire industry and because of this, investors had lost interest in high-rise unit developments and were turning to “safer” house-and-land packages suitable for families.

Buyer’s agent and chief executive of propertybuyer.com.au Rich Harvey said buying new apartments in outer suburban areas like Rouse Hill made no sense.

“While it may be nice to have a shiny new kitchen and bathroom, there is a significant downside price risk as the supply of land for further development is plentiful," Mr Harvey said.

"Investors and home buyers are far better off seeking apartments in locations where land supply is very low and demand for property high.

“In a market where prices are declining, there is a settlement risk for the buyer if they discover that the value paid for the unit has declined significantly."

“Say the purchase price was $650,000 some two years ago, but at settlement the bank valuation came in at $585,000 (i.e. 10% lower), then the purchaser has to find an additional $65,000 to settle the property. This could be a serious problem for some cash-strapped buyers.”

Mr Harvey recommended seeking independent advice and guidance from a local expert buyer’s agent who understood the dynamics of the local property market.

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