Sydney units

The Sydney danger zones with an oversupply of units

PHOTO: Construction in Parramatta, one of the suburbs with the biggest unit supply. Picture: John Fotiadis Source: News Corp Australia

Multiple suburbs have more than 1500 apartments still in the pipeline over the next two years despite falling demand for units – a situation that has put buyers in a dangerous position.

Parramatta, Mascot and Rouse Hill in the northwest have topped a list of Sydney suburbs “oversupplied” with apartments.

These suburbs each have more than 1500 units in the pipeline over the next two years, which will increase the current supply of apartments by 13 per cent or more.

A similar situation was unfolding in Gosford on the Central Coast, where close to 1900 units were set to be built, which would increase unit supply by 73 per cent.

The oversupply in these areas has raised the risk of dangerous price reductions for buyers of units sold off the plan, according to RiskWise research.

RiskWise chief executive Doron Peleg said there were already risks associated with off the plan units but they have been exacerbated during the COVID-19 pandemic.

One of the biggest risks is that the glut of new apartment projects in some areas will coincide with reduced buyer demand – particularly from investors, he said.

Investor activity was low before the pandemic because of tighter lending restrictions but falling rents and rising vacancies have created a further disincentive for new investors to purchase units.