7 Australian Suburbs Where Housing Prices Are About to Get Much Worse

Added: 2026-05-18

[00:00:00]Right now in May 2026, the average Australian property is worth $910,000.

[00:00:08]The headlines are screaming that it's a great time to buy. But here's what nobody's saying. In certain suburbs across this country, you could buy a property today and it could genuinely be worth less in 2 years. Not because of a global crash, not because of some black swan event. because of things that are already in motion, data that's already been published, trends that the real estate industry is quietly hoping you don't notice. In today's video, I'm going to walk you through exactly seven suburbs where the data is flashing red and explain why they're at risk so you can make decisions with your eyes wide open. Let's talk about what's actually happening in the Australian housing market right now because it is not what the headlines suggest. Totality, which you probably know as Core Logic, just dropped their April 2026 data. National home values rose 0.3% that month. Sounds fine, right? Except that was the slowest pace of growth since January 2025. And underneath that national average, two of Australia's biggest cities are already falling. Sydney dropped 0.6% in April alone. Melbourne dropped 0.6%.

[00:01:18]Sydney is now 1% below its November 2025 peak. Melbourne is 2.3% below its all-time high back in March 2022 and still going backwards. SQM Research, a completely independent firm, not the big banks, with skin in the game, is forecasting Sydney and Melbourne could fall between 4% and 9% by end of year if the RBA raises rates to 4.6% which interest rate futures are now pricing in as likely. The story you've been told is that Australian property always goes up.

[00:01:51]And over the long run, for the right property in the right location, that's still broadly true. But in these seven specific suburbs, the data tells a very different story. Right now, Suburb has honed South Bank, Melbourne. The data first. South Bank is one of the most recognizable post codes in Melbourne, and it's been absolutely hammered. Prop track data shows unit values in Melbourne's inner CBD precinct, South Bank chief among them, have been falling consistently. The investor selloff in Melbourne has been concentrated precisely here. Here's why. South Bank is what analysts call investor grade stock. These are high-rise towers, small floor plans built for yield, not livability. When interest rates rise, these are the first properties that investors dump. And when investors dump, there's nobody to catch the falling knife because owner occupiers, families, downsizers don't want a 48 square meter box on the 22nd floor. Core Logic's data confirms that areas with the highest unit supply densities are leading the declines. What this means for you, if you're eyeing a South Bank apartment because the price looks cheaper than it did 3 years ago, that's not a discount.

[00:03:06]That's a trend. And the trend isn't finished yet. Suburb, hasht Carlton, Melbourne. Carlton feels different from South Bank. It's got the terraces, the university, the cafe strip, but Carlton has the same fundamental problem in its unit market. Dense supply and an investor heavy ownership base. The data.

[00:03:27]Melbourne house values are forecast by A&Z to fall 1.7% in 2026. But the unit market in dense inner suburbs like Carlton is forecast to underperform that figure significantly because new apartments keep getting completed and hitting a market where demand has softened and rental yields have compressed. The scenario, say you bought a Carlton unit in 2022 for $520,000.

[00:03:55]At today's rates, you're paying around $3,200 a month on a standard 80% LTV mortgage. your rental income maybe $2,100.

[00:04:07]That's a $13,200 annual shortfall every year just to hold the thing. And the resale price is still going backwards. That's a slow bleed.

[00:04:17]And a lot of Carlton investors are just starting to feel it. Here's a number that should stop you in your tracks.

[00:04:23]Auction clearance rates in Melbourne and Sydney have been sitting below 60% since mid-March. Below 60% is the threshold where economists agree that sellers are losing negotiating power. The last time we sustained rates this low in Melbourne was during the 2018 2019 downturn and prices fell 11% from peak to trough in that cycle. Suburb 3 Sydney Olympic Park NSW. This one is specific and the numbers are brutal.

[00:04:55]Sydney Olympic Park unit values have dropped 11.1% over the last 5 years. That's not a typo. While the rest of Sydney was broadly climbing, Olympic Park was going backwards. Why? It's the same structural issue. High density investor grade towers originally pitched as the future of urban living. Buyers who purchased off the plan in 2017 and 2018 are now sitting on assets worth less than they paid in some cases by six figures. And because so many units are investorowned, the rental competition is fierce.

[00:05:30]Landlords undercut each other on rent just to avoid vacancy, which further destroys the yield story that attracted investors in the first place. The compounding problem. A&Z data shows new apartment approvals in Sydney are up 49.2% yearonear, which sounds great for supply, but in overs supplied precincts like Olympic Park, more supply is the last thing prices need. None of those new builds will be ready before 2028.

[00:05:59]But the sentiment damage is already being done. Suburb, hash4, Zetland, New South Sydney. Zetland is the poster child for the 2010s apartment boom in Sydney. Huge towers, young professional renters, tight streets, and now a market with more stock than buyers. The pattern.

[00:06:20]Property analysts from Core Logic's own commentary have specifically flagged Zetland alongside Homebush and Paramata as areas to avoid due to oversupplied highdensity precincts. In Zetland, the issue is simple arithmetic. Supply has exceeded organic demand, and investors who stretched in the low rate era are now trying to exit at the same time.

[00:06:41]Real impact. A three-bedroom unit in Zetland that traded at $1.35 million in early 2022 is now asking $1.19 million and sitting on market.

[00:06:55]Discounting rates across the combined capitals have already blown out from 2.9% to 3.1% in recent months. In Zetland, buyers report successfully negotiating 56% below asking. That's a $60,000 $80,000 haircut on a million dollar purchase. That's real money. Suburb South Headland, WA. This one's a bit different. It's not about high-rise apartments. It's about a mining town.

[00:07:25]And mining towns are the most volatile property markets in Australia. Full stop. The data totality's best of the best report for 2025 identified Southland as the single worst performing unit market in the entire country down 14.1% in 1 year 14.1%.

[00:07:44]For context, Melbourne's decline, which everyone's ringing their hands about, is sitting at 2.3% from peak. Why it matters?

[00:07:53]South Headland's fate is tied directly to commodity prices and BHP's operational decisions. When iron ore demand from China softens or when a mine hits peak production and the workforce stabilizes, the rental market collapses and property values follow. Right now, global commodity markets are uncertain and Southland has been here before. In 2013, some properties in the Pilra lost 50% of their value in 18 months. If you own here, this is not scaremongering.

[00:08:27]It's history. Have a clear exit strategy. Suburb 6 Paramea NSW highdensity precincts. Paramea is a complicated one. The house market in Paramea still has structural tailwinds.

[00:08:41]Western Sydney infrastructure investment, the Western Sydney airport, strong rental demand from affordability constrained buyers. But the highdensity apartment precincts along Church Street and the Riverbank, a different story.

[00:08:55]The split. Sydney's property market in 2026 is bifocating sharply. The Western Corridor houses are posting 67% annual growth in suburbs like St. Mary's and Fairfield. But the investment towers closer to the Paramea CBD are competing in a crowded market with too many near identical units chasing the same tenant pool. The specific risk, new apartment approvals in greater Sydney are up 49.2% yearonear. Most of that pipeline is concentrated in the Paramea LGA. Every new building completed over the next 3 years adds competitive pressure to existing units. Investors holding 2019 era apartments with 20124 era mortgages are being squeezed from both sides. Rising costs, flat rents, depreciating asset. Suburb 7, Hobart, TAZ, inner suburbs. This one will surprise people. Hobart was the darling of the pandemic. Sea change, tree change, remote work, lifestyle upgrade.

[00:10:02]The price surge was real, but the data now shows the hangover is real, too. The hard numbers. Hobart house prices are currently 2.1% below their record highs from March 2022.

[00:10:16]And unlike Sydney and Melbourne, Hobart doesn't have the population growth engine to power a quick recovery. Net overseas migration into Tasmania is significantly lower than the eastern mainland capitals. And the remote work surge that drove the original boom has faded as major employers have started pulling people back to offices in Sydney and Melbourne. The compounding problem.

[00:10:39]Housing construction targets for Tasmania have the weakest attainment rates in the country according to the National Housing Supply and Affordability Council. Fewer completions sounds like it should support prices, but in Hobart's case, it means there's no new affordable entry-level stock, which is suppressing first home buyer activity and leaving a market that relies too heavily on speculative demand that has now dried up. All right, here's the thing that most property commentators won't tell you because frankly, it cuts against the property always goes up narrative. The seven suburbs we've talked about share one thing that has nothing to do with location or infrastructure or council zoning. They share ownership structure.

[00:11:21]When a suburb is dominated by investors where 60% 70% 80% of properties are investment holdings that suburb becomes uniquely vulnerable to rate rises because investors are making a calculation every month. Is my yield covering my costs? The moment that answer is no and they can see prices are softening, rational investors sell. And they all sell at the same time. And that's what a downturn looks like.

[00:11:49]Here's the counterintuitive insight. The safest suburbs in a downturn are the boring ones. The ones where 80% of owners are families who bought because they wanted to live there. They don't sell in a soft market. They sit tight.

[00:12:02]They renovate. They dig in.

[00:12:05]Owneroccupier suburbs have a natural price floor. Investor dominated suburbs do not. The suburbs on today's list are not bad suburbs. South Bank is glamorous. Zetland is convenient. Hobart is beautiful. What makes them risky is not what the properties are, it's who owns them. And what those owners will do when the holding cost becomes too painful. So before you buy anywhere, ask your agent one question that most buyers never think to ask. What percentage of this suburb is owner occupied? If they can't tell you, find the ABS data yourself. That single number will tell you more about downside risk than any glossy suburb report. So, let's bring it together. Three things you need to walk away knowing. One, Sydney and Melbourne's broader markets are in early stage decline right now. Totality data confirms both fell 0.6% 6% in April alone and SQM research is forecasting falls of up to 9% by year's end in a worst case rate scenario. This is not speculation. This is already in the data. Two high density investor grade apartments in overs supplied precincts.

[00:13:15]South Bank, Carlton, Olympic Park, Zetland, Paramata are the most exposed assets in the current environment. If you own in these areas, get current valuations and have a clear strategy. If you're looking to buy in these areas, the discount isn't a deal. It might be the beginning of a trend. Three, owner occupier suburbs with genuine infrastructure investment. Western Sydney's growth corridors, for example, are structurally different markets. The same interest rate environment that's hammering South Bank is barely touching Fairfield or St. Mary's because different people own those houses and they have different reasons for holding them. So, here's what I want you to do this week. Look up the ABS table builder data for any suburb you're considering buying in. Find the owner occupier rate.

[00:14:05]If it's below 50%, you are buying into an investor market. And right now, that is a genuinely elevated risk. Now, here's my question for you. Are you currently holding an investment property in one of these markets? or are you watching a suburb like this and wondering whether to pull the trigger?

[00:14:23]Drop your suburb in the comments and I'll give you my honest read on the data. If this kind of no BS property analysis is useful to you, the kind that actually looks at the data instead of just repeating what the real estate industry wants you to hear, then subscribe because every week I'm digging into the numbers that matter, where the smart money is moving, where it's quietly running away from, and what the RBA's next move means for your mortgage.

[00:14:50]And if you want to understand why Sydney and Melbourne are diverging so sharply from Brisbane, Adelaide, and Perth right now, and which of those growth markets might be the next to peak, watch this video next. It's the one I'd want someone to have shown me before I made my first property decision.