The majority of the no-go zones for property buyers were in the Greater Parramatta area, Sydney Olympic Park area and a belt of suburbs stretching south of the Sydney CBD to the airport.
The suburbs included the Parramatta CBD, Ermington, Harris Park, Homebush, Waterloo, Zetland, Carlingford and Wolli Creek, among others.
These were areas where a high supply of new apartment projects and falling property sales meant price falls were likely to continue for some time, according to the research by Hotspotting.com.au.
The warnings were included in the trends forecaster’s latest Price Predictor Index, which analyses markets based on rises and falls in sales activity to determine the strongest and weakest markets.
Sales volumes were identified as a strong predictor of future rises and falls in prices — historically prices grow following an increase in sales and fall when sales volumes have been declining, according to the index.
“The Sydney metropolitan area has over 700 suburbs, but we can find only five with a growth trajectory in terms of sales activity,” the report said.
“The flip side of this story … is a few clusters of struggling suburbs where sales activity has dropped significantly. These are primarily apartment markets.”
Sydney property prices have already been falling for some time. CoreLogic’s monthly Hedonic Home Vale Index last showed growth in Sydney prices way back in July 2017.
Since then, home prices have dropped by an average of 5.4 per cent, while in some areas the falls have been substantially larger.
Reflecting the influence of falling sales volumes and a long pipeline of new apartment projects, prices in the Parramatta council area dropped by an average of 6.5 per cent.
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In Ryde, where there has also been rampant apartment construction, prices dropped by an average of 7.7 per cent over the year. Inner west prices dropped by 8.8 per cent and in the Hills the drop was 9.2 per cent.
The Price Predictor report suggested Sydney’s southwest remained the only large market where housing values could still rise.
It pinpointed the suburbs of Macquarie Fields, Rosemeadow, Spring Farm and Tahmoor as the city’s strongest.
The southwest was considered a healthy market due to strong activity from first home buyers and increasing demand due to infrastructure projects.
“Macquarie Fields, Rosemeadow, Spring Farm and Tahmoor have some momentum in their sales,” the report said. “The Camden and Campbelltown LGAs are solid performers in this regard as well. These markets are still quite busy — and, we suspect, will remain so because these are developing areas with land available for new communities.
“Elsewhere across the vast Greater Sydney region the best that can be found are suburbs (that will) plateau or (show) a decent level of consistency.”
Hotspotting’s Terry Ryder said investors who wanted to maximise their chances of buying properties that would steeply rise in value were best off looking outside Sydney.
“Because you pay much lower prices than capital cities, you are getting much better rental returns and if you are buying in the right regional areas you have got good prospects for capital growth.”
The 17 “danger” markets included: Wolli Creek, Wentworth Point, Waterloo, Rhodes, Parramatta, Mascot, Homebush, Homebush West, Haymarket, Harris Park, Forest Lodge, Ermington, Epping, Chippendale, Carlingford, Breakfast Point and Zetland.