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.
Controversially, the unit market in Brookvale witnessed declines of 9.8% 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 Anna Porter.
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% 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.”
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%.
“We’re seeing the same thing Brisbane has been seeing for years starting to filter through here. There is an oversupply of units” says Anna.
“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 Ms Porter.
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% declines,” says Anna.
“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 Anna.
“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 Anna Porter.
Units in East Melbourne have also fallen 15.5% 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 Anna.
“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.
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% and houses 3.9%.
As for the sunny state, East Ipswich houses in QLD despite being touted as a hotspot for investing have declined 3.5%.
Coomera in QLD has also fallen victim to negative growth and house prices have declined by 5.5% even though it is within commuting distance of both Brisbane and the Gold Coast.
State by State Overview – Where got hit the hardest?
Idalia, located near Townsville in QLD nose-dived 43.8 percent and was the worst performer.
Anna 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,” Anna 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.
The worst performers in South Australia were Solomontown, located north of Adelaide in a regional area experienced a negative trend of 27.5% for the housing market and Eastwood with 28% 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 Ms 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 Ms Porter.
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,” Ms Porter says.
Australian Capital Territory
The vanquish for Canberra was Downer where unit prices fell 39% in twelve months and Gilmore where houses fell 5%.
“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 Ms 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,” Ms Porter explained.
The largest negative housing growth recorded for Victoria was Chewton which lies between Melbourne CBD and Bendigo, recording declines of 30.9%. 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,” Anna Porter says.
The worst performer for Western Australia was in fact the inner city location of Burswood, with declines of 37.2% for the housing market and 46.2% 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 Anna Porter.
The housing market in Katherine has been subject to declines of 19% whilst the unit market in Marrara has been hit with 18.8% 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 Anna 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%-10% 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.
Brookvale units -9.8%
Glenorie houses -8.3%
Olympic Park units -2.3%
Turramurra units – 4.6%
East Melbourne units -15.5%
Mansfield Park houses -3.9% units -8.4%
East Ipswich houses -3.5%
Coomera houses -5.5%
State by State Overview
Rocherlea houses -12.5%
Trevallyn units -25%
Gilmore houses -5%
Downer units -39%
Chewton houses -30.9%
Lorne units -37.1%
Idalia houses 43.8%
Telina units -32.9%
Solomontown houses -27.5%
Eastwood units -28%
Burswood houses -37.2%
Crawley units -46.2%
Katherine houses -19%
Marrara units -18.8%
New South Wales
Peak Hill houses -37.2%
Narooma units -19.8%
For more information, please view the full comprehensive report.
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