Perth, WA – Certain regions in Australia are subject to oversupply of housing. Many property investors focus on demand without regards to supply.
These areas where oversupply is abundant would be best avoided by investors. Investors in these areas tend to inadvertently pull down property values. When supply is too high, the prices drop to keep pace.
Property observers and experts have blamed the Gold Coast’s fall in housing prices to oversupply. Wyndham City is another location where the supply is high and prices have fallen.
Instead of dragging down housing prices in areas where there are already enough homes to go around, investors and large-scale builders might consider building new properties in regions that are less saturated.
Bargaining Power of Oversupply
Although investors may want to avoid regions where oversupply is high, it can be good news for property buyers. In some regions with oversupply, houses may take an average of five months to sell. These areas are great for buyers who can often negotiate for a lower asking price. After five months, sellers are usually eager to take whatever price they can get for their home and make a move.
First time home buyers who are flexible in their location can inquire into which regions of Australia have the most oversupply. As housing prices drop, homes become more affordable in these areas. Home owners who plan to move into a house and eventually sell it for their next move should consider how long they plan to stay.
If buyers prefer to move out after a year, they may find themselves in the same predicament of waiting five months for the house to sell. However, if buyers plan to stay for a few years and sell, there is a good chance the market will have come back by then. Oversupply regions could be a viable investment.
Which Regions Have Oversupply
Property expert Terry Ryder noted 10 regions for investors to avoid in the current property market. Brisbane’s Inner City, Emerald, Gladstone, Gracemere, and Hunter Region all made the list. So did Mackay, Melbourne Inner City, Moranbah, Perth Inner City, and Port Hedland.
Home buyers should consider all the pros and cons of these regions before deciding to make a move. They should take a look at the market trends and upcoming developments to see if the market might make a comeback in the coming years.
In Brisbane’s Inner City, for example, there are many developments planned in the coming five years. That indicates that the oversupply will continue during this time period, which could be good news for home buyers. Perth and Melbourne may have similar trends.
Regions to Avoid
However, there are plenty of other factors that go into home buying decisions aside from affordability. In Emerald, Hunter Region, and Mackay, the coal industry is contracting. Homes are dropping in price with valid reason, because the main economy is in decline.
Home owners must carefully consider the liveability of a region when deciding where to purchase their next home.
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