Macquarie Bank has put special conditions on loans, including higher deposits, for a series of suburbs across Australia, mostly in central city areas where a glut in apartments is feared.
The restrictions on 120 postcodes comes after increasing comment about oversupply in the inner city apartment market, especially Melbourne and Sydney where another 200,000 units will come online over the next year.
There was a rush for property investments during the housing boom of 2015 with developers selling off-the-plan apartments to local and overseas investors.
But now many of these units have been completed with final payments due from those investors.
The Reserve Bank late last year warned of the risks to the property market from a glut in inner city apartments.
The RBA’s Financial Stability Review said the high rise construction boom “could lead to an excessive increase in construction activity and future supply overhang”.
New apartments in major cities could “weigh on prices and rents”, reducing the income of investors and making units harder to sell.
APRA (Australian Prudential Regulation Authority) also moved to restrict lending to property investors.
The riskier suburbs marked by Macquarie Bank include Sydney’s CBD, the 2000 postcode and nearby areas including Millers Point, Melbourne city 3000 and surrounding postcodes including the trendy Southbank, plus Brisbane’s 4000, Surfers Paradise and central Cairns.
Inner Perth, Adelaide and parts of Hobart are also on the risky list.
Macquarie, in a memo to mortgage brokers, says 30% deposits will be needed for the 120 suburbs, about 10 percentage points more than usual.
Most of the banks have also been imposing restrictions on foreign buyers and investors, increasing the loan to valuations ratios and discounting any unverified income from prospective buyers.
Analysts, including BIS Shrapnel, have been warned of a coming glut in inner city apartments for some time. BIS Shrapnel warned of oversupply in forecasts made more than a year ago.
Recent sales data shows apartments in central Melbourne are being resold at discounts of up to 30% from their original off-plan purchase price.
Here are the suburbs reportedly on the blacklist.
2000: Sydney, including Sydney South
2002: World Square, Alexandria MC
2004: Alexandria, Eastern Suburbs
2006: The University of Sydney
2017: Waterloo, Zetland
2138: Concord West, Liberty Grove, Rhodes
3004 St Kilda Road Central
3005 World Trade Centre
3006: South Wharf, Southbank
3141: Chapel St North, South Yarra
3205: South Melbourne
4004: Spring Hill 4000, 4004
4001: Central Plaza, Riverside Centre, Waterfront Place
4002: City East, Wintergarden
4003: George Street
4215: Australia Fair, Chirn Park, Labrador, Southport
4217: Surfers Paradise inc. Benowa, Bundall, Chevron Island, Gold Coast, Isle of Capri, Main Beach,
4218: Broadbeach, Mermaid Beach, Mermaid Waters, Nobby Beach, Pacific Fair
4870 Cairns, Aeroglen, Barron Gorge, Brinsmead, Bungalow, Earlville, Edge Hill, Freshwater
4879: Palm Cove & surrounds
6003: Highgate, Northbridge
6004: East Perth
6005: Kings Park
5005: University of Adelaide
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