Each bank has a list of suburbs, or postcodes, that they deem as a high risk and restrict their lending to those locations. This might mean they may not lend to them at all, reduce their risk in lending to them (by asking the borrower to pay a higher deposit), or not lend to a certain property type in that area – normally high rise apartments.
When selecting a location for investment property at Nyko we believe you should always take a scientific results based approach. The final piece of research in that approach is supply – more importantly the supply equation in relation to demand. There is of course no benefit in a location with amazing population growth if there is even more supply coming into that area.
A good cheat sheet resource for what suburbs are carrying the most risk are the banks suburb ‘blacklists’. All banks have one and occasionally they are leaked. Most (read almost all) of these locations consist of an oversupply of high rise apartment developments and at Nyko we agree this is where the highest risk remains
If a bank has restricted lending to an area then it’s a safe bet that these areas are carrying higher risk. At nyko, we believe that high rise apartment projects, even in the best of areas, do not provide the best growth potential and offer an unacceptable additional risk in the form of competition.
Now there are of course exceptions to every rule. But if we were to offer a high rise apartment development it would have to something extraordinary and we would certainly never offer the whole building. In high rise buildings, selecting the right units is vital because views, light and aspect are what differentiates them.
So while at Nyko we don’t discount high rise apartments altogether, its evident that the suburbs and property types we approve are the opposite to what is available in these blacklisted locations. It will be some time before Nyko moves away from the medium density projects (boutique apartments and town houses) in the middle ring suburbs of major cities.