As the Australian property market shifts in 2024, it’s just as important for property investors to recognise the best places as well as the worst places to invest in Australia.
Several suburbs across major cities like Sydney, Melbourne, and Perth are struggling with declining property values and oversupply, making them risky investment choices.
Key economic challenges, such as interest rate hikes, are compounding issues in these regions, further affecting potential buyers.
Investors who are considering entering the property market should be aware of the multiple economic metrics indicating the worst places to invest in real estate.
Some of these areas have been marked by low capital growth, increasing vacancy rates, and poorly performing housing stock.
Where Are the Riskiest Areas to Invest in?
The table below highlights underperforming suburbs in Australia, focusing on key areas where property values have dropped significantly over the past five years.
| Suburb | City | Median Value ($) | Change in Value (12 months) | Difference from Peak (%) | Peak Date |
| Sydney Olympic Park | Sydney | 748,964 | 0.6 | -14.8 | Jun 2017 |
| West Melbourne | Melbourne | 515,858 | -3 | -13.9 | Jan 2018 |
| Abbotsford | Melbourne | 534,165 | -7.4 | -16 | Apr 2017 |
| Kensington | Melbourne | 548,655 | -3.3 | -13.5 | May 2017 |
| Port Hedland | Port Hedland | 410,282 | 2.6 | -8.5 | Oct 2017 |
| Cable Beach | Broome | 447,500 | 0 | -9 | Jun 2018 |
| North Coogee | Perth | 105,3682 | -2 | -5 | Sep 2020 |
| Bennett Springs | Perth | 570,000 | 1.8 | -6 | Jul 2017 |
These suburbs, including Sydney Olympic Park and West Melbourne, have struggled due to higher supply and low demand, making them some of the worst places to invest in real estate.
The data also shows how these locations are still far from recovering their peak values, reflecting the ongoing challenges for investors in these markets.
Sydney’s Struggling Suburbs
The Sydney suburbs facing the greatest challenges are those with an oversupply of units and apartments.
Sydney Olympic Park, for example, has seen property values drop sharply, leaving many investors at risk of losing money.
Other areas, particularly in the outer regions, are also struggling due to stagnant demand and the increasing burden of interest rates.
If you’re interested in crime rates, check out our guide on the Worst Suburbs in Sydney For Crime.
Melbourne’s Risky Markets
In Melbourne, the story is much the same. Outer suburbs like West Melbourne and Abbotsford are among the worst places to invest in real estate.
These areas have experienced limited growth over the past five years, with prices unable to rebound from previous highs.
The situation is worsened by a glut of available housing stock, keeping potential buyers at bay.
Explore Soho’s round up of the Worst Suburbs in Melbourne For Crime for more context around the city.
Risky Suburbs to Invest in Perth and Western Australia
The situation in Western Australia is equally concerning, with several suburbs marked as high-risk investment zones.
Areas like North Coogee and Bennett Springs face weak property values and an excess of available units.
Despite being located in desirable coastal regions, the market in Western Australia is not performing as expected. Port Hedland is another example of an area with declining appeal for investors.
What is a Blacklisted Suburb?
A blacklisted suburb is generally defined as a location where property values are consistently underperforming.
These areas tend to have high vacancy rates, low capital growth, and building data that reveals a problematic over-supply.
Investors are advised to avoid these areas due to the high likelihood of losing money over time.
What 11 Sydney Suburbs Are Blacklisted?
The 11 Sydney suburbs that are particularly risky for property investors include Haymarket, Zetland, Lidcombe, Wentworthville, Homebush, Asquith, and the Parramatta CBD.
According to a CoreLogic pain and gain report, homeowners in these areas have struggled to sell their properties at a profit, often receiving less than what they originally paid.
What four Melbourne suburbs are blacklisted?
The four Melbourne suburbs that are most concerning for investors include West Melbourne, Abbotsford, Kensington, and South Melbourne.
These areas have been hit hardest by oversupply and low demand, with prices falling significantly in recent times.
What Suburbs Are Blacklisted in Queensland?
Suburbs like Mermaid Waters, Biggera Waters, Surfers Paradise, Benowa, Ashmore, Currumbin Waters, and Labrador, along with the luxury areas of Mermaid Beach and Southport, have been blacklisted.
Even more affordable suburbs with strong growth, such as Coombabah and Highland Park, were included.
These regions have struggled with low demand and have seen a slow recovery in property values. Investors should be cautious when considering these areas, as they remain high-risk markets.
Conclusion
While certain locations in Australia may appear attractive at first glance, the underlying data reveals that some regions carry significant risks for investors.
With multiple economic metrics showing poor capital growth and oversupply in key suburbs, it’s crucial for potential buyers to avoid these no go zones.
By analyzing building data and understanding how interest rates impact the property market, investors can make more informed decisions and avoid the worst places to invest in real estate.
If you’re looking for the best places to invest in Australia, read Soho’s latest feature.
