The best and worst suburbs to buy off the plan

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Jun 28, 2017

The best and worst suburbs to buy off the plan

Waterloo in NSW, inner-city Melbourne, and Fortitude Valley in Queensland are higher risk areas to buy off-the-plan apartments, according to new research from Risk Wise Property.

Apartments in Green Square in Sydney's Waterloo.

Waterloo in Sydney, inner-city Melbourne, and Fortitude Valley in Queensland have been identified as potential "danger zones" for off-the-plan real estate investment in new research by Risk Wise Property.

Some of the lowest risk real estate investments identified were off-the-plan houses in Kellyville in NSW, North Geelong in Victoria and Manly West in Queensland.

New apartments on Sydney's North Shore were also identified as relatively safe off-the-plan investments.

RiskWise Property Review founder Doron Peleg said the firm's research identified 100 danger zones across Australia.

The RiskWise Property Review was conducted to help the company identify the best and worst areas for investment in new real estate around Australia.

The research shows that off-the-plan houses are usually a better investment than new units, a trend that holds across every capital city.

“Currently, more than 300,000 units are in the pipeline and are planned to be completed in the next two years,” said Peleg.

“Some areas with significant supply of off-the-plan properties have been flagged by the RBA as high risk investments and also major lenders have set lending restrictions and created ‘blacklists’ for some areas," he said.

The vast majority of off-the-plan properties for sale are in high risk areas, said Peleg.

Peleg said off-the-plan property always carries a degree of risk, and usually deliver a lower return than established property.

“In addition to the typical risks associated with an existing property, an OTP property is also exposed to a settlement risk and to a significant sudden addition of new dwellings, mainly investment properties, into the area,” he said.

Peleg said when considering purchasing new property, buyers should consider the economic growth of the suburb and the proportion of new properties in the area.

The research also found that off-the-plan apartments in middle-ring suburbs did better than in inner suburbs, and affordable off-the-plan units performed better than more expensive units.