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 investors must avoid.
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. Australia saw a 37 per cent increase in the number of suburbs where values fell compared to the same report last year.
Controversially, the unit market in Ultimo witnessed declines of 29.1% according to the report.
“There has been an overdevelopment of units to the Ultimo market in recent times, which just isn’t being taken up at the rate it needs to be to accelerate growth,’ Ms Porter explains. “Ultimo just has too much supply for the market of inappropriate unit stock.”
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 in many Hills district suburbs.
“Winston Hills housing market has declined by 7.5%, North Rocks with 6.9% declines, Kings Langley witnessing 2.6% declines, Cherrybrook seeing 1.2% negative growth, Bella Vista declining by 2.4% and Baulkham Hills declined 2.6%,”
“The prestige pocket housing market of Galston NSW, in the Hills district, has seen an 22.6% 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.
“Dural has a median price of $1,440,000 yet is still being swooped with the negative growth figures, declining by 8.8%.”
Then there’s the aerotropolis surrounds, having been brought to life by the long-awaited Badgery’s Creek airport and new activations to the precincts but this south-west Sydney pocket is definitely not the answer for investors.
Liverpool’s unit market saw declines of 7%.
“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.
“Liverpool 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, a number of suburbs in Sydney’s North Shore have also failed to meet growth expectations.
“The unit market in Turramurra has failed to grow for the second consecutive year in a row and has declined by 5.2% after experiencing 4.6% declines seen in the same report last year,” says Anna.
“Again, 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, coupled with 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.
‘As projected 12 months ago, the North Shore market is heading into a correction and the surrounding areas to Turramurra were expected to follow in its footsteps. We have now seen declines in the unit value in Crows Nest (-3.9%), Freshwater (-6.8%) and Lane Cove (-4.4%),”
“Significant house value decline was also seen in Church Point where values declined 25.3%,” says Porter.
The most negative housing growth recorded in Melbourne was seen controversially in St Kilda with a negative rate of -28.7%. Other worse performing markets in the Victoria housing market were Cardigan Village (-16.7%), Glenrowan (-16.1%), Lake Wendouree (-19.7%) and Williamstown North (-21.7%).
Units, however, were a sad story with Melbourne’s Aberfeldie reporting a 35.8 per cent decline in values and Toorak (-17.2%), and Blackburn (19.9%) among other suburbs reporting concerning growth.
The worst performing of the 153 unit market’s was Aberfeldie in Melbourne’s north-west, 9km from the CBD with a contraction of 35.8 per cent.
“This is a direct outcome of the staggering oversupply of unit stock in these locations, and the CBD as whole, given Melbourne CBD has a unit decline of 3 per cent itself,” Anna Porter says.
“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 won’t 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.
“Some larger regional centres had suburbs where unit investments should be avoided for now, including Fitzroy (-10.2%), Hawthorn (-5%), Geelong (18.2), Bendigo (-15.2%), Prahran (-9.5%), South Yarra (-4.4%), Southbank (-1.3%), St Kilda (-6.7%) and West Footscray (-11.5%)she said.
“And units across most regional centres performed terrible too, including Sheparton (-9.4%), Wendiuree (-15.6%) and Cobram (-16.7%).”
“Fortunately, houses in Geelong West grew by 11.5% and units in Geelong West also had a 17.5% growth compared to the sharp decline in unit growth for Geelong (-18.2%) for the same period,” says Porter.
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%.
“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, according to these statistics,” says Ms Porter.
The worst hit by negative growth was Phillip with a 26.4% decline in unit price value. Trotting not too far behind was both City with -15.6% growth and Griffith with -15.4% growth in the unit market.
“Essentially, 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 and still far too many are being built and coming out of the ground every other week. So, this will continue to put downward pressure on values and will start to impact vacancy rates,” Ms Porter explained.
As for the housing market Mawson was most effected with -8.7% negative growth and Chifley with a negative growth of -8.5%. The housing market in Banks also had negative growth of -7.1%.Over to Queensland, Sunset in the mining region of Mount Isa saw house prices fall by 27.9 per cent, a direct reflection of businesses in the area continue to wind down.
“Developers often get creative and many investment firms push Beachmere near Deception Bay as a good investment area but the unit values here have actually dropped by 49.8%,” says Porter.
The mining boom slowly coming to an end has also impacted values in towns in Western Australia.
“Regional mining towns are great when there’s a mining boom, but if you go regional, you have to think what happens when the market turns that corner,” warns Porter.
“The mining city of Kalgoorlie has been hit hard in recent years, and according to my report the nearby town of Kambalda has seen house prices fall up to 35 per cent.”
“Few new suburbs have been added to the list within Perth between last report and this report which indicates a positive direction for the capital city,” says Porter.
State by State Overview can be seen below
NSW is currently seeing a broader downturn, which is reflected in the data;
Church Point Houses/ -25.3% (2105)
Wollongong/Mangerton Units/ -43.9% (2500)
Victoria is also starting to push through some pain, with the unit sector bearing the brunt;
St Kilda Houses/ -28.7% (3182)
Aberfeldie Units/ -35.8% (3040)
Queensland has been less impacted in the metro housing market, but the units and regional areas are certainly feeling the pinch;
Sunset Houses/ -27.9% (4825)
Beachmere Units/ -49.8% (4510)
Western Australia is just starting to recover overall and many of the metro areas are stabilising and there are fewer metro suburbs on the list this year as compared to last. the regional mining towns however are still taking time to stabilise;
Kambalda West Houses/ -35.9% (6442)
West Busselton Units/ -31.6% (6280)
South Australia is seeing some good growth in the suburbs, but the regional pockets can still feel the pain;
Port Macdonnell Houses/ -22.8% (5291)
Allenby Gardens Units/ -28.7% (5509)
Tasmania is a boom and bust market and the looming bust is showing in some sector already;
Shorewell Park Houses/ -26.9% (7320)
East Launceston Units/ -14.2% (7250)
Northern Territory is certainly still seeing a strong downturn and this is expected to continue;
Bakewell Houses/ -19.8% (832)
Nightcliff Units/ -32.2% (810)
Australian Capital Territory is a growth market and only a few suburbs are being impacted, with most seeing strong growth. The exception is the unit market, that is certainly feeling the pain with an oversupplied pipeline and it is not a well accepted product in the area;
Mawson Houses/ -8.7% (2607)
Phillip Units/ -26.4% (2606)
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