20 markets where rents and prices are set to sink

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Investors beware. Victoria’s Bellarine Peninsula, a community just east of Geelong, is set for a tough time for property price growth – according to DSRscore.com.au data.

Four of the peninsula’s prominent suburbs, which include St. Leonards, Portarlington, Indented Head and Drysdale, are within a list of 20 national suburbs where prices and rents are set to remain flat or decrease over the coming months and, possibly, years.

The list included only suburbs with at least 15 properties being listed on the market.

Other property markets set to struggle include five suburbs spread across Tasmania, as well as Agnes Water, just north of Queensland’s Sunshine Coast.

Scotland Island, 30km north of Sydney and within the local government area of Pittwater, is the only suburb from New South Wales to crack the top 20.

The top 20 suburbs were ranked according to their DSR score – a measure of the ratio of supply to demand. A high DSR score indicates a market where prices are likely to increase. A low DSR score indicates a market where a number of indicators show that growth in prices and rents is set to perform badly.

In each of the 20 suburbs on the list a number of factors combined to show that property prices were likely to fall. Each suburb had a high rate of vacancies, low rental yields and, most importantly, a very high percentage of properties being sold on the market.

For Redwerks research director Jeremy Sheppard, inventor of the DSR score, the last factor is particularly significant in markets where there is already lacklustre demand for property.

“Market prices move in response to the changes of demand and supply. New infrastructure projects, rising population, new education or health centres, good employment opportunities and the like, all influence the demand for property in a particular location ... prices will rise if demand exceeds supply,” he says.

By that logic, Sheppard says that in markets with low demand and a high supply of properties, prices will struggle to grow. The same is equally true of rents. High vacancy rates tend to indicate markets with an oversupply of rental accommodation. In these conditions, rental prices are unlikely to increase.

20 markets where rents and prices are set to sink

Source: DSRscore.com.au, all data is for detached houses.

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