20 suburbs property investors should avoid

·2-min read
Suburb in Perth
Property investors should avoid these 20 suburbs if they want strong returns. (Source: Getty)

A new report has revealed the 20 suburbs to avoid when looking for a high-performance investment property, with Yarrawonga on the Murray River in Victoria identified as the softest property market for houses.

Diggers Rest in north-west Melbourne was also flagged as a suburb unlikely to perform well, according to the Suburb Help report, as well as Perth suburbs Girrawheen, Yokine, Midland, Rivervale, St James, South Guildford and Riverton.

Zuccoli in Palmerston in the Northern Territory also made the top 10 list of places to avoid.

While stronger rental returns in most of the country are attracting investors back into the property market, the report found there were still several suburbs unlikely to deliver strong returns in a rising-interest-rate environment.

Several suburbs in Sydney were identified as poor markets for units, including Parramatta, Sydney (city) and Rouse Hill.

“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,” Suburb Help chief property strategist Veronica Morgan said.

“Some of these locations have been stinkers for a long time. Others, though, have been good places to invest in the past and might again be good places to invest in the future.

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

The research considered inventory levels as well as days on the market.

Inventory levels refer to the amount of time it would take to sell all the houses or units in a particular location imagining all dwellings kept selling at the current rate and no more were added to the market.

When inventory levels are falling, that means it’s becoming harder for buyers to find properties, which puts upwards pressure on prices.

“Inventory levels have been rising in all these locations and, in some instances, are extremely high,” Morgan said.

“At the same time, days on market are on the high side, and often rising as well.

“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.”

houses to avoid
Source: Suburb Help
Source: Suburb Help

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