Chifley Securities no-go zones for investors

The non-bank finance group Chifley Securities has created a list of suburbs in Sydney and Melbourne that it rates as “high risk” and no-go zones for lending for residential developments.

In Sydney they won't lend for greenfield development sites in Schofields, in the Blacktown area, as well as regions in Box Hill.

The likes of Leppington, Badgerys Creek and Kemps Creek, Kurrajong Heights, Katoomba and Orchard Hills also make the list.

In Melbourne Chifley Securities highlight Plumpton and suburbs in the Bacchus March corridor as no-go areas.

Truganina to the west, Officer to the east and Cranbourne to the south are also now off-limits for Chifley.

Chifley has lent $2 billion to developers over the 2018/19 financial year.

Chifley Securities principal Dominic Lambrinos says no-go zones have been created on the basis that many outer-lying suburbs of Sydney and Melbourne pose serious risks for both developers and buyers due to an explosion of development activity.

“These areas are seeing explosive growth in the number of residential dwellings, yet are not yet supported by the necessary infrastructure required to support vibrant communities.

“While there might be a new railway station, road and supermarket in a suburb, this infrastructure does not fill the requirement for a sustainable and healthy and profitable development for both developers and residents”, he added.

Lambrinos said the list would be amended once the market and amenities in the suburbs “caught up” with the greenfields developments now saturating the suburbs.  

While the residential market has been flattened by over-supply and a range of quality issues related to a range of buildings, the commercial and industrial property sectors continued to perform well, he said.

“Meanwhile we continue to see more residential developers coming to Chifley and our competitors as their pre-sales dry up, amid the realisation that many have paid comparatively high prices for their land”, he added.

Lambrinos said further cuts to interest rates were expected to be made over the next few months in an attempt to remedy the growth slump in the economy and property markets.

“While credit guidelines have been loosened by the Australian Prudential Regulation Authority (APRA), financing by the major lenders continues to be tight and non-bank lenders are taking up the slack”, Lambrinos said.