Top 20 suburbs for investors to avoid, report warns

• New research unveiled top 20 suburbs investors should avoid, due to rising inventory levels and days on market
• WA not the place to be it seems, earning 10 and 6 positions on the housing and unit market rankings
• Investors should avoid these markets in favour of alternatives offering superior growth, says Veronica Morgan

New research commissioned by Suburb Help, and conducted by Suburbtrends, has revealed the top 20 Australian suburbs that investors ought to avoid.

The findings, released in the quarterly Suburb Help Where Not to Invest Report, compiled a list of all Australian suburbs with a legitimate and soft property market.

The resulting rankings evaluated both the housing and unit markets, with Western Australia and New South Wales over represented in each respectively.

Rising inventory levels and days on market telltale signs

Suburb Help chief property strategist Veronica Morgan said that as interest rates continue to rise, it’s pertinent that investors identify and avoid areas unlikely to give them a strong return on investment.

“The reason property investors should avoid the suburbs in this report is not necessarily because they’re bad locations but because they’re bad locations as of May 2022.”

Veronica Morgan, Suburb Help

Ms Morgan added that some suburbs crowned among Australia’s worst have performed underwhelmingly for a long time, while others may see the tides turn in the future.

“Right now, though, I’d advise property investors to avoid these markets, because there are much better alternatives,” she said.

The suburbs that made the ranking all had two factors in common, making for an unfavourable combination – rising inventory levels and rising days on market.

“When you put those data points together, it suggests that prices in these locations will
either grow slowly in the medium-term, or go backwards. By contrast, there are other
locations in Australia that will deliver superior price growth,” Ms Morgan added.

Top 20 worst housing markets for investors

While Perth residents can often be found celebrating living in Australia’s most affordable capital cities, this latest news may not garner cheers from investors.

Western Australian suburbs earned half of the positions on the top 20 worst suburbs leaderboard for the housing market.

Surprisingly, the state still avoided top spot with the Victorian suburbs of Yarrawonga and Diggers Rest taking gold and silver medals.

Only three suburbs had an inventory level – that is, the amount of time it would take to sell all the houses in the suburb – that surpassed 12 months. The report indicated that in suburbs with inventory levels this high, the data is volatile and hence could not result in a reliable prediction.

Number of listings ranged from just 16 houses to 92.

Top 20 ranking (houses)

Top 20 worst unit markets for investors

In the unit market however, New South Wales received a remarkable 11 positions on the ranks while Western Australia still earned a noteworthy mention of 6 suburbs.

Paramatta and Sydney were crowned the top two worst markets, with 281 and 236 current listings respectively.

Suburbs with inventory levels above 12 months were significantly higher in the unit market. 10 of the suburbs had immeasurably high inventory levels, while listings ranged from 22 to 281.

Top 20 ranking (units)