The nation’s 65 property coldspots

While it’s natural that property investors always start out by looking for the best suburbs to buy in, it’s equally important to know which suburbs to avoid.

But picking property coldspots isn’t easy – after all, today’s underperformer might be tomorrow’s rising star.

However, RP Data’s national research director Tim Lawless has come up with a solid strategy. He’s looked across every state and territory in Australia to locate 65 areas where properties aren’t exactly flying off the real estate agent’s books.

The strategy is simple – Lawless looks at the size of the discount the vendor has had to accept on their original asking price (the bigger the discount, the worse the ranking) and the length of time the property has remained on the market (the higher the number of days, the worse the ranking).

The common theme across the states is that it the inner city areas account for a high number of poor performers.

“This may be due to the strong capital gains seen in many of the inner city and coastal markets over the last year which have sent prices to record highs,” Lawless says.

When we look at the median prices of Lawless’ worst performers, we can see another pattern.

“Looking at median prices, the markets where selling time and vendor discounting is the highest mostly tend to be priced above the citywide median,” he says.

But a word of warning from Lawless before you scratch these suburbs off your list of target suburbs – there is likely to be a few great buying propositions on these lists.

“For desirable suburbs, these areas potentially represent some of the best opportunities for buyers as they have more potential for negotiation on price and less time pressure due to the longer selling times recorded in these areas.”
Adelaide

Perhaps it’s not surprising that in the city that Don Bradman called home we should get a suburb where homes average more than a century of days on the market – in Glen Osmond, home owners could expect to wait a whopping 107.2 days to sell, and accept a 12% discount to boot. Another blue-chip suburb, North Adelaide, also features prominently, with an average discount of 11.9% and average time on market of 65.3 days.

In terms of units, the discounts are smaller but the wait can be particularly long, especially if you live in Glenelg North and West Beach.

Brisbane

The suburb of New Farm in inner Brisbane is considered one of the city’s best places to live. But according to Tim Lawless’ research, it’s not one of the easiest places to sell a house. Homes in the area took an average of 74.4 days to sell, and buyers were forced to accept an average discount of 10.1%. It’s a similar story in other inner city suburbs like Paddington and Herston, where discounts were above 10%.

Turning to units, we see a similar pattern. Four of the five worst performing suburbs are within three kilometres of the city and units in most took more than two months to sell. Discounts were generally well under 10%, except for South Brisbane where vendors saw discounts of 10.4%.

Canberra

Vendors in the suburb of Casey have required a lot of patience in recent times – as Tim Lawless’ list of underperforming Canberra suburbs, homes in the area have taken an average of almost three months to sell. However, at least Casey vendors could expect a discount of only 2.9%. Sellers in the outer Canberra suburb of Gordon, where media prices are around $480,000, were forced to settle for a discount of a whopping 14.6%.

Darwin

Darwin’s worst performing suburb is also one of its more expensive. According to Lawless’ research, homes in Parap stayed on the market for an average of 75.2 days, with a small discount of 3.2%.

Indeed, discounts were under 4% for all of the bottom five suburbs, which suggests Darwin prices have held up well.

Hobart

Patience is clearly required in some Hobart suburbs – Lawless’ research shows two suburbs have average selling days over 100 days (Lauderdale and Geliston Bay) while another (West Hobart) is just under this mark. However, it is worth pointing out that even in these worst performing suburbs, vendor discounts stayed under 10%.

Melbourne

Lawless’ list of Melbourne’s worst performing suburbs is dominated by two top-notch names from Melbourne’s least east – Kew and Balwyn, where million dollar price tags could not hide the fact that vendors were waiting almost 70 days for a sale and could expect a discount of about 10%. However, it was vendors in the outer suburb of Lalor that face the biggest discount – an average of 16.3% below original asking price.

When we turn to units, we see eastern suburbs also dominate, with Kew again making the list. However, even inner city unit vendors can face a long wait – in West Melbourne, the average time on market was 73.7 days.

Perth

The Perth property market has gone a touch backwards over the last three months, led by some of the more expensive suburbs. Coolibina (median price of $1 million) and Applecross (median of $1.67 million) were among the worst performers on Lawless’ list

When we look at units, it’s a similar story – expensive areas such as Crawly, Bicton and Perth, relatively close to the city and selling periods of up to two months. Vendors could expect to be forced to accept the biggest discount in Perth, where average discounts of up to 13.6% on original selling prices were seen.

Sydney

It’s the big numbers that hit you on Lawless’ list of the worst performing suburbs in Sydney – the worst performers are all in blue-chip suburbs such as Paddington, Mosman and Manly, where prices are well over $1 million (and well over $2 million in the case of exclusive Mosman) but discounts are well over 10%, and days to sale are over 70. Things are a little better in the outer suburbs of Terrey Hills and Oatlands, but not much – homes still took an average of almost two months to sell.

In terms of units, it’s a similar story. Inner city suburbs such as The Rocks and Alexandria were the worst performers, while it was even difficult to sell homes in reasonably-priced areas like Ultimo and Lakemba.