The dangerous CBD residential markets: Richard Wakelin

The dangerous CBD residential markets: Richard Wakelin
The dangerous CBD residential markets: Richard Wakelin

Melbourne buyers advocate Richard Wakelin says the CBD could stand for Could Be Dangerous - especially when buying highrise, non-descript, cookie-cutter units.

That's clearly what the CBD in central business district residential property now stands for in the eyes of the NAB's risk managers.

Our five major CBDs – Sydney, Melbourne, Brisbane, Perth and Adelaide – are now "red-flagged" by our fourth-largest bank, which now requires a 20% deposit from new borrowers buying there, Richard Wakelin wrote recently in the Australian Financial Review.

He added that what was especially telling about their list was the inclusion of Brisbane, Adelaide and Perth.

"These are CBDs where capital growth hasn't been strong in recent times," he said.

"Indeed, in its 20-per-cent-deposit-please list that included 43 postcodes, the only inclusions outside of NSW and Victoria were postcodes 4000, 5000 and 6000."

The bank obviously sees a heightened risk of price falls and mortgage arrears in these areas, but it is being vague about its reasons.

"Some of the factors that we take into consideration include investor growth levels, property price growth, rental yield and the regulatory environment," is how an NAB spokesperson described the lender's criteria in The Australian Financial Review last week.

Wakelin says developers are pumping out residential towers at a rate far in excess of genuine demand with the credit tightening too late to avert the looming crisis for high-rise.

"It was astounding as you would have thought they would have learnt the lessons of previous boom-bust episodes such as we saw in Melbourne's Docklands and the Gold Coast," Richard Wakelin, director of Wakelin Property Advisory.

 

Paul Nugent of Wakelin Property Advisory and Stuart Wemyss of ProSolution Private Clients will discuss strategies for young adults to enter the property market in an upcoming webinar.

The one-hour webinar starts at 12.30pm on Thursday 29 October. You can register here.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

Tags: 
CBD Residential Market

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