Several of Perth’s most popular suburbs have been included on a national blacklist, with experts advising investors of potential property value declines, Domain reported.
Almost 50% of the 111 “no-go zones” named by Positive Property, a national investment advisory firm, are located in Western Australia, with 27 in Perth alone.
The blacklist covers a broad range of areas, from regional towns to inner-city neighborhoods and outer suburban developments.
On the list were suburbs such as Scarborough and Brabham, which is heavily populated with sprawling housing estates on the city’s outskirts.
The advisory group’s report analysed multiple economic factors, market indicators, and council data from nearly 15,000 suburbs across Australia.
On the national scale, Port Hedland placed fourth among the most high-risk locations for property investment.
Other WA suburbs in the top 10 include Dayton, Broome, and North Coogee. Australind, Cable Beach, Nickol, and Burswood also ranked among the 20 least recommended areas for investors.
Futurologist Rocky Scopelliti noted that towns like Port Hedland, which depend on single industries like mining, are especially vulnerable to becoming “residential dustbowls” if the industry declines.
“The rapid decline in economic activity can lead to job losses, population decline, and reduced property values,” Scopelliti said.
Scopelliti also warned that newer suburban developments, including Yanchep and Alkimos, might face challenges due to delayed infrastructure.
“This mismatch can lead to dissatisfaction, reduced demand, and eventually signs of urban decay,” he said, adding that oversupply in areas like Banksia Grove and Byford could depress property values and increase vacancy rates.
Resolve Property Solutions’ Peter Gavalas (pictured above left) acknowledged that while some experts caution about the risks in Perth’s property market, he remains optimistic about the broader economic outlook.
“Our economy is so much more diverse in 2024, and we aren’t just relying on mining as we have been in the past,” Gavalas said.
However, the buyers’ agent also agreed that newer suburbs like Wellard and Bennett Springs carry increased risks for investors, Domain reported.
James Limnios, managing director of Limnios Property Group, highlighted the role of interstate investors in the growth of Perth’s outer suburbs.
These investors are attracted by the high rental yields but may not realize that a lack of local employment hubs makes these areas vulnerable to economic downturns.
“These new homes in the outer city fringe areas could quickly be turned into a residential dustbowl,” Limnios said.
Tim Lawless (pictured above right), research director at CoreLogic, noted that affordability pressures and government reluctance to fund sprawling infrastructure are driving a renewed focus on urban density.
Lawless highlighted the disparity between Perth and cities like Melbourne, where denser housing options are more prevalent.
“There hasn’t been much progress in densification across Perth,” he said.
Despite some recent growth in multi-unit dwellings, Perth still lags far behind national trends, with only 9.5% of new housing units completed over the past year being multi-unit developments, Domain reported.
Despite warnings, investor activity in WA has surged, with lending to property investors doubling over the past year compared to early 2021 levels. Monthly investor loans in WA have increased by around $1 billion since mid-2023.
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