Apartments in 13 Sydney suburbs are on a confidential black list because of growing concerns about oversupply, off-the-plan sales, and, in some areas, falling prices, according to leaked documents.
AMP Bank, the banking division of the largest financial services group that compiled the list, claims it is a “prudent” response to managing risks of “over-supply”, which could push down prices, rents and lead to defaults.
“We have identified certain high density areas where we have put provisions in place to manage risk and over-supply,” a spokesman says. “We take a prudent approach to managing risk,” she says.
In Sydney the focus is for developments around the central business district and inner suburbs of Dawes Point, Darling Harbour, Millers Point and Sydney South.
Apartment black-listed suburbs:
- Darling Harbour
- Dawes Point
- Millers Point
- Parliament House
- Sydney South
- The Rocks
- Eastern Suburbs MC
AMP borrowers will face tougher terms on the amount borrowed, number of apartments purchased in a single development and a ban on using some incentives offered by developers, such as rental guarantees.
Sydney, which has been the nation’s top performing residential property market, posted rises of nearly 10 per cent for apartments and 5.5 per cent for rents during the past 12 months, according to SQM.
An estimated 45,000 apartments are due for completion and settlement over the next nine months to Christmas in Melbourne, Sydney and Brisbane, an increase of nearly 25 per cent compared to last year, according to planning consultancy MacroPlan Dimasi.
Lenders are also worried that off-the-plan investors might not be able to bridge a deposit gap caused by lower loan-to-value ratios, which means bigger deposits before settlement.
This story was first published in the AFR