A property research company has identified 10 markets in Australia under threat from an oversupply of properties.
The research by Terry Ryder from Hotspotting.com.au shows inner-city apartments and regional centres reliant on coal are especially vulnerable.
Brisbane’s inner-city area was picked as the most concerning market.
“In Brisbane, the CBD began 2014 with a vacancy rate of 6.3 per cent, while four near-city markets – New Farm, Kangaroo Point, South Brisbane/West End and Woolloongabba – all have vacancies above four per cent,” Mr Ryder said.
He warned the situation “would get worse before it gets better”.
“The key piece of information is still that Brisbane has 69 major apartment projects of more than 100 units each scheduled for the next five years, according to PRDnationwide data,” he said.
The Melbourne and Perth CBDs face similar challenges.
“These markets have very worrying trends and, particularly in the case of Melbourne, have the potential to curtail the wider city markets around them because of the extent of the oversupply,” Mr Ryder said.
Several of Queensland’s mining towns were also blacklisted, including Emerald, Gladstone, Gracemere and Moranbah.
In Emerald, vacancies rates have climbed to nine per cent since February last year when coal production in the Bowen Basin began to diminish.
House prices have also dropped by nine per cent in the period, according to data from Hotspotting.com.au.
“Long term, Emerald has a major future as a regional centre for the agricultural and coal industries,” Mr Ryder said.
“But currently this is a market to avoid – at least until the new resources projects get under way and the existing accommodation surplus is absorbed.”
In New South Wales, the Hunter region is also suffering from slow economic growth and overdevelopment.
“Contraction in the coal industry – though likely to be short term only – has extracted the heat from the property market at a time of rising developer activity,” Mr Ryder said.
Port Hedland in Western Australia was also deemed a potential danger zone, with Mr Ryder warning investors to be cautious of spruikers.
“Investors need to be aware of supply issues because marketing companies continue to pump out promotional material for new developer product at high prices in mining-related markets that are in sharp decline,” he said.