The areas in Australia property investors should think twice before investing

Gosford has been named the top suburb in Australia that property buyers should think twice about before purchasing in, new research shows.

RiskWise Property Research has revealed the top 10 suburbs nationally which they deem risky.

Gosford in NSW topped the list nationally as the suburb has been affected by the recent bushfires, according to the property research house.

An oversupply of units in the Central Coast suburb is also perceived to be risky for investors. More than 1,851 units are in the pipeline for the area in the 24 months, which is more than 72 per cent of existing unit stock.

Additionally, the type of units in the Gosford market are seen as unsuitable for families, reducing tenant demand in the area.

The median price of a two-bedroom unit in Gosford is $415,000 fetching $380 per week in rents, data from Domain showed.

Coming in second was Mascot, located 7km south of Sydney’s CBD.

More than 1000 units are slated for the inner-city suburb in the next two years. This accounts for a more moderate 18 per cent of the existing unit market.

But news of apartment building construction defects in Mascot, which dominated headlines in 2019, has chipped away at the suburb’s reputation.

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Two-bedroom units in Mascot have a median price of $833,000, generating $720 a week in rents, Domain data indicated.

In Sydney’s Rouse Hill, almost 1,200 units are planned for development – representing about 150 per cent of units already built in the area. This makes it one of the most oversupplied suburbs in the top 10 list, when considering new apartments as a percentage of existing stock.

Yet, in a telling sign, not enough units have been sold in the north-west suburb in the past 12 months to calculate a median price, according to Domain.

Ranked fourth on RiskWise’s list was Darwin, where apartment oversupply was not the only reason which contributed to its reputation as an area with higher investment risk.

As the Northern Territory was the only state or territory in Australia which saw population loss in 2017-18, weak population growth has had an impact on the property market, RiskWise Property Research CEO Doron Peleg said.

He added that Darwin unit values have dropped by more than 33 per cent in the past five years.

Despite these factors, more than 1000 units are underway in Darwin, adding another 27 per cent to the unit market.

Mr Peleg said areas with high supply should be approached with caution.

“What we are seeing is that new units in high-supply suburbs either resulted in a loss or underperformed the market, even during periods of strong price increases,” he said.

“The recent downturn is not the major factor in those losses - even ignoring the recent downturn and then recovery, they are still materially underperforming the market.”

State Postcode Suburb New units next 24 months New units as % of existing stock

NSW

2250

Gosford

1,851

72.47%

NSW

2020

Mascot

1,061

17.67%

NSW

2155

Rouse Hill

1,183

149.75%

NT

0800

Darwin

1,042

26.99%

QLD

4217

Surfers Paradise

3,891

19.46%

QLD

4006

Fortitude Valley

1,390

26.56%

SA

5000

Adelaide

1,984

20.03%

VIC

3168

Clayton

1,097

23.97%

VIC

3008

Docklands

2,435

22.30%

VIC

3128

Box Hill

1,167

20.41%

Source: RiskWise Property Research