NSW real estate: the danger postcodes where buying an investment property is risky

A ‘no go zones’ report for property investors has flagged the most dangerous suburbs to buy in across Australia due to falling rents and prices, and rising vacancies.

Suburbs with an abundance of newly built high-rise apartments and towns dependent on mining or tourism have been flagged as the worst markets for investors to buy property across Australia.

A “No go zones” report for investors revealed multiple pockets where an oversupply of properties relative to buyer demand has squashed rents, driven up vacancies and sent prices into a downward spiral.

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The most notable markets ranked among the 20 worst locations in Australia were towns heavily reliant on the resources sector, especially coal mining, according to the analysis of CoreLogic, ABS and SQM Research data by Positive Property Group.

They included Queensland towns Moranbah, Blackwater, Moura and Emerald, with central Rockhampton – a popular market for FIFO workers – also flagged as “risky” due to an oversupply of units.

Rents and prices have been volatile in towns reliant on mining such as Moranbah. Picture: AAP

Other towns listed among the worst markets included Roxby Downs and Ceduna in South Australia, which service nearby mining regions, and Cobar in NSW.

Among the worst capital city locations were the high-density suburb of Mays Hill, near Parramatta in Sydney, and Darwin’s CBD, where there is a high concentration of newly built high-rise units.

Positive Property director George Markoski said a common theme among the most risky markets was an oversupply of properties, usually units.

“Places like Mays Hill and Roxby Downs or other mining towns may appear different but they are the same in many ways,” he said. “They have a history of developers overbuilding and it’s easy for them to just keep adding more homes.”

He said mining towns were particularly risky markets because they often had short periods of incredible price growth that attracted investors.

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“The problem with boom towns, and there is a similar thing with touristy places, is that when rents and prices suddenly shoot up, developers get excited. They jump on the bandwagon and they build so much it destroys the areas.

“If you’ve bought there, it become very hard to sell or get a tenant.”

The riskiest locations for investors tended to have an oversupply of housing.

Additional research by Select Property Group, measuring the balance of supply to demand, showed inner Melbourne suburb Docklands remained a risky market.

Select research director Jeremy Sheppard said the suburb had “over supply issues”.

“Docklands’ problem has been overdevelopment,” he said. “Big high rises take a long time to complete. Projects that already commenced years ago still have to find buyers.”