How to Protect Yourself from Oversupply

Current Supply vs. Future Supply

Jeremy splits supply into two categories: current supply (properties currently listed for sale) and future supply (properties developers may build later, not yet listed).

Why Raw Listing Counts Are Misleading

Comparing two South Australian suburbs, Morphett Vale (40 houses currently listed) and Aldinga Beach/Panorama Hills area (six houses listed), Jeremy shows that the suburb with far fewer raw listings is actually more oversupplied in percentage terms. Morphett Vale has over 9,000 houses total, making 40 listings just 0.4% of stock, well below the national average of just under 1%. The smaller suburb, with under 900 houses, has six listings representing 0.7%, nearly double Morphett Vale's percentage despite the much smaller raw number. Jeremy's key point: a raw count of properties for sale (even a seemingly large national figure like 200,000 listings across the whole country) tells you nothing meaningful on its own, only the percentage of total dwellings currently listed reveals genuine oversupply risk.

Why Development Applications Aren't a Reliable Safeguard

On future supply, Jeremy explains that checking council development application (DA) records can give a false sense of security, since a council might confirm zero current applications, only for a new one (say, for 100 houses) to be lodged the very next month after a purchase is made. His preferred method instead is simply checking Google Maps (or Bing Maps) directly for large tracts of vacant, developable land nearby, since that represents the underlying potential for future supply regardless of whether an application has been formally lodged yet.

Damien notes that population growth figures often cited in property reports are really just a signal of future supply, not genuine demand, since people can't move into an area faster than new dwellings become available for them to occupy.

How Much Does a Modest Increase in Supply Actually Matter?

Using the smaller of the two example suburbs (under 900 houses, currently around 0.7% stock on market), Jeremy and Damien model the impact of an additional 100 new dwellings being built, potentially pushing stock on market from under 1% up toward 5%, a meaningful jump. However, they note this wouldn't happen overnight, land registration and construction take years, and if new stock is quickly absorbed by owner-occupiers or investors as it becomes available, the impact is softened. The bigger risk, in Jeremy's view, is a large, ongoing tract of farmland capable of supporting thousands of new dwellings over many years, rather than a smaller, finite release of perhaps 100 properties. Damien references a personal recollection of visiting the Donnybrook area north of Melbourne several years ago, describing continuous farmland and active development as a clear example of this larger-scale risk.

The Two-Step Protection Strategy

Jeremy's core recommendation for avoiding future oversupply comes down to two rules: don't buy a unit (since new unit blocks can be built nearby at any time, and an existing house can be knocked down and replaced by many new units on the same footprint), and buy a house in a genuinely built-up area, well away from large tracts of vacant land. Buying a house in this way means competing against other houses (a more limited, slower-to-expand category of supply) rather than units, and even offers a potential future option to sell to a developer or redevelop the site personally if surrounding density does eventually increase. Damien adds that townhouses may become an increasingly popular, more affordable middle-ground option for investors going forward, since they still carry some land content, unlike a unit, though he clarifies "vacant land" in this context refers specifically to large-scale undeveloped tracts (like ongoing farmland releases), not simply having a modest number of newer homes nearby.

Visual Examples: Built-Up vs. Vacant-Land-Adjacent Areas

Jeremy shows a satellite image of Seaton Park (Adelaide), a genuinely built-up area with little to no visible vacant land nearby, illustrating the kind of location that offers strong protection from future oversupply, since any redevelopment would be limited to small-scale infill (for example, one house being replaced by a handful of townhouses) rather than large-scale new estate development.

By contrast, an area to the west of Melbourne shows extensive existing development alongside substantial remaining vacant land to the west and northwest, which Jeremy says will very likely continue to be developed over time, tempering capital growth for nearby established properties in the meantime. His guidance: stay a meaningful distance away from this kind of area (he suggests around 7 km as a reasonable buffer, acknowledging this needs to be balanced against budget and practicality), since oversupply effects can be felt several kilometres beyond the immediate development zone itself.

Real Examples of Long-Running Oversupply

Jeremy presents Clyde North (southeast fringe of Melbourne) and Marsden Park (western Sydney, past Blacktown) as real examples, both showing stock-on-market percentages around 6–7% for houses, dramatically above the national average, and sitting near the very top (around the 99th–100th percentile) of thousands of measured markets nationally. He notes he wrote about both of these same suburbs in an article roughly four years prior, illustrating that this kind of oversupply-driven stagnation can persist for many years, sometimes a decade or more, rather than resolving quickly. Both suburbs have avoided significant price falls thanks to still-sufficient underlying demand, but have remained largely flat over that four-year period while the broader national market experienced substantial growth over the same time. Damien notes markets like Marsden Park tend to be dominated by owner-occupiers drawn in by affordability, rather than investors specifically.

Using the Context Ruler Tool

Jeremy explains the "context ruler" visualisation used to illustrate where a given suburb sits relative to the rest of the country: red representing poor (oversupplied) outcomes and green representing favourable ones, with the national average, median, and quartile breakdowns displayed along the ruler. For houses specifically, the vast majority of Australian suburbs sit below roughly 2% stock on market, making Clyde North and Marsden Park's 6–7% figures clear outliers. He also notes it's possible, in extreme cases, for a suburb's calculated stock-on-market percentage to exceed 100% (as high as 261% in one example he references), where off-the-plan properties are marketed and counted as available stock well before they're actually built.

Closing Thoughts

Summarising the approach: focus on percentage of stock on market rather than raw listing counts, use Google or Bing Maps to check for large tracts of vacant land near any prospective purchase (referencing Episode 9 for a deeper dive on this specific topic), favour built-up areas at a sensible distance from vacant land, and buy a house rather than a unit. Damien adds that reviewing stock-on-market figures across an entire significant urban area or local government area (which might span 20–40+ suburbs) can help identify broader red flags beyond just checking maps for a single suburb in isolation. Both note that stock on market is just one useful indicator among several (with the full DSR algorithm considered the more complete measure), becoming most critical specifically when assessing markets that already look questionable on other grounds. They close by encouraging listeners to like, comment, and subscribe for future episodes.