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Buying property? The suburbs blacklisted by banks

Be careful where you buy your next property.

Even though you may like the location, your bank may not.

Did you know that all the banks have “blacklisted suburbs” – suburbs where they are not keen on lending and where borrowers face tougher hurdles to get a mortgage and have to stump up a bigger deposit.

In fact, some banks have a list of suburbs where they are not prepared to lend at all, or particular new developments in which they feel they have an overexposure and are not prepared to “risk” taking on extra loans.

In general, these unpopular suburbs are inner city and near CBD locations where there is an abundance of new high density apartment complexes.

And this comes at a time when banks are tightening scrutiny of income received and household expenditure used in their serviceability models to assess loan eligibility, making it harder for property investors to get finance.

Last year confidential list of suburbs was sent to mortgage brokers by the big four banks and more recently Citi sent a note to brokers highlighting 34 Sydney postcodes, 27 in Melbourne and 12 in Queensland where it’s loath to lend.

The good news is this list also highlights a number of suburbs where it is still keen to lend 90% LVR.

What does this mean for you?

If you’re looking for a new home or investment property around 80% of your property’s performance will be determined by its location and possibly only 20% by the specific property you buy in that location, therefore researching the correct location is critical.

This all has to do with demographics and wages growth which leads to affordability – not cheap properties, but locals who can afford to pay more for their homes.

So look for a location that is gentrifying or find an area where economic growth will create jobs and wages growth so that disposable incomes of the locals are growing strongly making housing more affordable.

And then make sure your bank is happy to lend you money to purchase in this location.

If you’ve already committed to buying a property off the plan it’s a good idea to look into your lending situation as soon as possible as the landscape may have changed since you first committed to your purchase.

Speak with your broker to ensure you haven’t bought in a suburb blacklisted by the traditional banks and possibly look for an alternative lender.

A selection of blacklisted postcodes

Sydney2000
Ultimo2007
Alexandria2015
Waterloo2017
Rosebery2018
Botany2019
Mascot2020
Bondi Junction2022
Stanmore2048
Greenwich2065
Longueville2066
Chatswood2067
Ryde2112
North Ryde2113
West Ryde2114
Epping2121
Sydney Olympic Park2127
Strathfield2135
Enfield2136
Concord2137
Liberty Grove2138
Homebush2140
Granville2142
Parramatta2150
North Rocks2151
Castle Hill2154
Kellyville2155
Canterbury2193
Campsie2194
Lakemba2195
Marrickville2204
Arncliffe2205
Rockdale2216
Hurstville2220

 

Melbourne3000
East Melbourne3002
West Melbourne3003
St Kilda Road3004
Southbank3006
Docklands3008
North Melbourne3051
Melbourne University3053
Carlton3053
Princess Hill3054
Sumner3057
Collingwood3066
Abbotsford3067
Doncaster3108
Doncaster East3109
Richmond3121
Hawthorn3122
Auburn3123
Box Hill3128
South Yarra3141
Darling3145
Dandenong3175
St Kilda3182
Balaclava3183
South Melbourne3205
Albert Park3206
Port Melbourne3207

 

Brisbane City4000
New Farm4005
Fortitude Valley4006
Hamilton4007
Albion4010
Chermside4032
South Brisbane4101
Buranda4102
Greenslopes4120
Coorparoo4151
East Brisbane4169
Seven Hills4170

Written by Michael Yardney

Michael Yardney

Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through property advice and advocacy. He is a best-selling author, one of Australia's leading experts in wealth creation through property and writes the Property Update blog.

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    • Hi Andrew,

      While we understand that not everyone lives in Sydney and Melbourne, the majority of our readers are based in the Eastern states. Unfortunately we cannot publish the full list of 11,000 post codes, but if you have questions about a certain area, we’d be happy to check the list for you.

      – Money team

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