The Coalition’s victory in the federal election is expected to firm up the housing market in the coming months, but major falls in prices remain a high risk in capital city suburbs oversupplied with housing.
A report provided exclusively to The Daily Telegraph revealed inner suburbs in Brisbane and Perth, along with emerging Sydney hubs, had the worst balance of supply to demand in the country, suggesting declines in prices were imminent.
The suburbs included Newstead, 3km north of the Brisbane CBD, and southern Perth enclave Bentley, a popular area for students and the location of Curtin University’s main campus.
Sydney suburbs Haymarket, Jordan Springs, Macquarie Park, Marsden Park, Riverstone and Harris Park were also included, according to the research by property group Location Score.
Group analyst Jeremy Sheppard said there was a risk of downward pressure on prices in these areas due to a range of factors.
“An oversupply of housing is the main issue in most of these suburbs,” he said.
“Developers have built too many (dwellings) and in some areas there’s too many of the same type of dwellings such as two-bedroom units … cookie cutter type homes rarely appreciate in value quickly.”
Property prices were also being heavily discounted in most of the nominated areas, with Haymarket and Bentley vendors typically slashing about 10 per cent off their original prices before selling.
This suggested buyer demand was weak and there was little chance of buyers absorbing the excess housing supply.
Newstead, which remains one of Brisbane’s most popular rental markets, had an additional issue with slow sales times.
The typical apartment in the suburb took nearly four months to sell, well above the two-month average for a capital city home sale.
With more than 2 per cent of all Newstead apartments currently up for sale, this suggested an environment where buyers had too much choice to bid up prices and could negotiate more favourable deals.
Homeowners in the area would be left with little prospect of an increase in equity and instead there was a risk new apartment buyers would own homes worth less than they paid for them.
But Mr Sheppard said the biggest supply issues were in Sydney due to a long pipeline of high-rise unit projects in some suburbs.
Just under 5 per cent of the all the homes in Jordan Springs, a suburb of mostly new housing near Penrith, were currently up for sale, according to the Location Score data.
The supply of housing in Jordan Springs was well above demand, which has been steadily falling over the past year.
And in Marsden Park, a Western Sydney suburb also dominated by newly built detached houses, nearly 6 per cent of the houses were currently on the market — an unusually large number for an area in Sydney.
Mr Sheppard said he doubted Sydney’s housing downturn would be ending soon and expected the slump to continued for years to come.
He compared the market to a big ship that was difficult to turn around. “It takes a long time for markets in Sydney and Melbourne to change. Prices were increasing for an extended time and it will be the same with the downturn,” he said, adding that prices may flatline across the city as a whole for years.
SUBURBS WITH HIGH SUPPLY, LOW DEMAND
1. Newstead, QLD
2. Bentley, WA
3. Haymarket, NSW
4. Jordan Springs, NSW
5. South Perth, WA
6. Meadowbank, NSW
7. Macquarie Park, NSW
8. Marsden Park, NSW
9. Harris Park, NSW
10. Riverstone, NSW