The media constantly declares certain suburbs as hotspots for investors and often fails to acknowledge that this is not always the case. The Suburbanite negative growth report will expose the areas that must be avoided by investors.

Suburbanite founder and director, Anna Porter, says the report is produced annually to aid investors in avoiding negative growth traps around the nation.

“We build this report to help everyday Aussies steer clear from the danger zones and avoid the negative growth trap. Each year, there are suburbs that are enlisted in the negative growth report that a number of investment firms still pitch to clients (often incentivised by hefty kickbacks),” she says.

“I compile this report every year to empower people to make decisions on actual numbers, not shopping centre models and spruikers. Yep, many markets that investors are encouraged into today are actually at the peak of their growth cycle.”

There has been an array of suburbs that have fallen in the negative growth category despite popular opinion.

Sydney, Brookvale

Controversially, the unit market in Brookvale witnessed declines of 9.8 per cent according to the report*.

"This location is predominantly a family demographic but there has been an overdevelopment of units to the market in recent times, which just isn’t being taken up at the rate it needs to be to accelerate growth. The accommodation style is not appropriate for the locale," Ms Porter explains.

"With a lack of good transport links to the area, but a housing style that is predominantly for young couples, singles and retirees there is no surprise that it underperforms when the market starts to cool off,” says Porter.

Sydney, Glenorie

Against general consensus, which has projected positive growth for the Hills district in Sydney around the near completion of the new public transport hub has done no favours for the housing prices of Glenorie.

“The prestige pocket housing market of Glenorie NSW has seen an 8.3 per cent decline. Prestige rural and residential locations tend to get hit first when the market starts to cool off. Especially when they offer lifestyle properties that have a limited market,” says Ms Porter.

“The suburb has a median price of $1,820,000 yet is still being swooped with the negative growth figures.”

Sydney, Olympic Park

Then there’s the Sydney hub, often brought to life by large sporting events, music concerts and office hubs, Olympic Park whilst a playground paradise is definitely not the answer for investors.

Olympic Park’s unit market saw declines of -2.3 per cent.

“We’re seeing the same thing Brisbane has been seeing for years starting to filter through here. There is an oversupply of units” says Porter.

"Sydney Olympic park is predominantly unit accommodation but the facilities in the area cater to families. So, the accommodation style is not appropriate for the locale. With a lack of restaurants, bars and nightlife in the area but a housing style that is predominantly for young couples, singles and retirees there is no surprise that it underperforms when the market starts to cool off."

"People buy here when they are priced out of more urban hubs that offer better lifestyle amenities, but when the buying power returns to the market this area starts to get overlooked for more desirable locations. This is exactly what we are starting to see in the stats", says Porter.

Sydney, Turramurra

Often disguised by high sales, strong rental returns and a ‘Northshore’ stigma, the city of Turramurra in Sydney has also failed to meet growth expectations. Turramurra is the only area in the north shore with negative growth.

“The unit market in Turramurra has failed to grow and instead has experienced 4.6 per cent declines,” says Porter.

"This market is the victim of too much supply coupled with developers and council building more units than the local infrastructure can handle. Resulting in major traffic congestion through to the CBD and the business park at Macquarie park," explains Ms Porter.

"When oversupply meets a cooling market and a lack of liability due to strained infrastructure, this results in markets seeing downturn even if the markets surrounding them are not in the same boat – yet!"

"One or two of these ingredients may not push a market into negative growth, but when all three fundamental issues collide the market is going to push through pain before the surrounding areas do,” says Porter.

"But this is an indication that the market is heading into a correction and it is just the tip of the iceberg, with the surrounding areas expected to follow suit in the coming 12 months," projects Porter.  

Melbourne, East Melbourne

Units in East Melbourne have also fallen 15.5 per cent which can be attributed to an oversupply that has not recovered despite it’s CBD location and popularity.

"The Melbourne unit market has been struggling with supply for nearly a decade now and the local authorities are not slowing the building down enough to allow the supply to be absorbed. The sky line is peppered with blacked out vacant units at night and this is putting downward pressure on values and on rental returns. It is very much a no go zone for investors looking to secure growth or solid returns and it wont turn around until the local authorities stop the overdevelopment," explained Porter.

“The great news for Victorian investors is that most of the worst performing markets were in remote and rural locations. Places that investors are unlikely to be looking anyway,” Ms Porter stated.

Adelaide, Mansfiled Park

In Adelaide, Mansfield Park is currently overrepresented by investors and the prices have been somewhat constrained. Block sizes are also smaller than the city average which reduces the appeal for an owner occupier. Units here have declined 8.4 per cent and houses 3.9 per cent.

Brisbane, East Ipswich

As for the sunny state, East Ipswich houses in QLD despite being touted as a hotspot for investing have declined 3.5 per cent.

Queensland, Coomera

Coomera in QLD has also fallen victim to negative growth and house prices have declined by 5.5 per cent even though it is within commuting distance of both Brisbane and the Gold Coast.

State by State Overview – Where got hit the hardest?

Queensland

Idalia, located near Townsville in QLD, nose-dived 43.8 per cent and was the worst performer.

Porter says suburbs and towns in key regional centres had some concerning declines in house values, despite popular opinion.

"These locations are built off the back of industries such as cattle, tourism and mining which are all industries in significant decline at the moment. With the drought hitting our farmers and the isolated nature of these areas it has not fared well for regional investors in these parts," Porter says.

“Similarly, Telina near Gladstone fell a massive 32.9 percent,” she said.

"Gladstone and the surrounding areas have seen significant declines with the downturn in mining activities throughout the area. In the past 5 years many investors tried to cash in on the never-ending mining boom and the seemingly endless coal mining, but have now come crashing back to reality with properties sitting vacant and hundreds of thousands of dollars being stripped off their values in very short periods of time. With little other industry propping up these economies, it was a mixing pot for disaster,” says Ms Porter.

South Australia

The worst performers in South Australia were Solomontown, located north of Adelaide in a regional area experienced a negative trend of 27.5 per cent for the housing market and Eastwood with 28 per cent declines in unit growth.

“Solomontown is in the Port Piri district which is built off the back of industries such as steel and agriculture, which are all industries in decline at the moment. With the drought hitting our farmers and the isolated nature of these areas it has not fared well for regional investors in these parts,” warns \ porter.

“Coupled with the downturn in mining and steel activities throughout the area, in the past 5 years many investors tried to cash in on the steel export boom, but have now come back to reality with vacancy rates creeping up and hundreds of thousands of dollars being stripped off property values. With little other industry propping up these economies it was a mixing pot for disaster,” says Anna Porter.

“Eastwood being an inner-city location has been impacted in the unit sector as it is not a suitable style of accommodation in this locale with houses performing much better,” says Porter.

Tasmania

Nine house markets in Tasmania and twelve unit markets recorded negative price growth*.

The worst being the Launceston suburbs of Rocherlea and Trevallyn which respectively delivered a 12.5 per cent decline in house prices, and a 25 per cent drop for unit prices.  

"There seems to be a real phenomenon of investors driving the growth of some of the locations in Tasmania and, not local buyers. This can create a significant volatility in the market,” Porter says.

Australian Capital Territory

The vanquish for Canberra was Downer where unit prices fell 39 per cent in twelve months and Gilmore where houses fell 5 per cent.

"It is very interesting to note that in Canberra the housing market is strong and seeing increases in value whilst the unit market is in significant decline," says Porter.

"New units do not perform well in the ACT as they are not very well aligned to the core demographic in the area, being younger families. They are also being oversupplied. This will continue to put downward pressure on values and will start to impact vacancy rates," Porter explained.

Victoria

The largest negative housing growth recorded for Victoria was Chewton which lies between Melbourne CBD and Bendigo, recording declines of 30.9 per cent. Units, however, were another story.

The worst performing unit market is a seaside location to the far south west of Melbourne, being Lorne which saw a contraction of 37.1 per cent.

"This is a direct outcome of the staggering oversupply of unit stock in Victoria overall," Porter says.

Western Australia

The worst performer for Western Australia was in fact the inner city location of Burswood, with declines of 37.2 per cent for the housing market and 46.2 per cent declines for the unit market in Crawley.

“These areas in Perth have been impacted by oversupply of unit stock and the housing market is very limited with high price points for few free-standing homes that get offered for sale. This prestige inner city market is usually one of the hardest hit when a market sees a downturn as Perth has in the past few years,” warns Porter.

Northern Territory

The housing market in Katherine has been subject to declines of 19 per cent whilst the unit market in Marrara has been hit with 18.8 per cent declines.

“Pine Creek iron ore mining nearby Katherine closed its operations in recent years and this has impacted the isolated townships of Katherine and Marrara whilst close to the airport and offering an urban lifestyle, properties with any negatives such as being near flight paths or on main roads tend to get hit the hardest when the market sees a downturn overall,” said Porter.

New South Wales 

New South Wales, according to the report has been the best performer. “This year, New South Wales outperformed all other states with only 12 markets recording negative housing growth and 16 recording negative unit price growth*.”

The suburbs hit the hardest were Peakhill and Narooma.

Holistically, the NSW housing market has had many great years of spic growth between 2012 and 2016, with the market starting to cool in some sectors and pockets through 2017. Mostly felt in the oversupplied unit pockets and premium price points. The broader market saw further impact of the cooling effect in the latter part of 2017 and we expect the 12 months of 2018 to be a far more grim picture for the market with the negative growth trend spreading further throughout the state.

Having said this though, our historical research shows a trend of typically only 5 per cent-10 per cent decline in values for most suburban and metro areas when the market hits this stage of the cycle. For those that have owned properties in the suburbs of Sydney, Wollongong or Central Coast over the past 3-4 years you have just about won the property lotto, so a small correction will not have much of an impact on the overall outcome. For the smashed avocado generation trying to get into the property market, the good news is that the buying power is set to return to the market over 2018 and for a few years to come.

Controversial suburbs

• Brookvale units -9.8 per cent
• Glenorie houses -8.3 per cent
• Olympic Park units -2.3 per cent
• Turramurra units -4.6 per cent
• East Melbourne units -15.5 per cent
• Mansfield Park houses -3.9 per cent, units -8.4 per cent
• East Ipswich houses -3.5 per cent
• Coomera houses -5.5 per cent

State by state overview 

Tasmania

• Rocherlea houses -12.5 per cent
• Trevallyn units -25 per cent

 ACT

• Gilmore houses -5 per cent
• Downer units -39 per cent 

Victoria

• Chewton houses -30.9 per cent
• Lorne units -37.1 per cent 

Queensland

• Idalia houses 43.8 per cent
• Telina units -32.9 per cent

South Australia

• Solomontown houses -27.5 per cent
• Eastwood units -28 per cent

Western Australia

• Burswood houses -37.2 per cent
• Crawley units -46.2 per cent

Northern Territory

• Katherine houses -19 per cent
• Marrara units -18.8 per cent

New South Wales

• Peak Hill houses -37.2 per cent
• Narooma units -19.8 per cent

*The Data in this report is for the 12 months to November 2017 and has been sourced from CoreLogic.

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