10 Worst Suburbs to Invest in 2026 - with Junge Ma

These are the 10 worst suburbs you can look into buying in 2026. We invest over $800,000 into data analytics every year. We don't do this for fun. We do this to outperform the market. But I do think that is fun.

This data gives us the clearest indications of the best places to buy. But not only the best places, it also shows us some of the worst. In this episode, I'm sharing our list, the 10 worst suburbs you could invest in 2026. I'm Junge Ma, the senior research analyst at InvestorKit. Now let's get into it.

So these 10 worst suburbs, they're not selected randomly. We actually have defined five types that are the worst to buy in in 2026 and then picked two suburbs as examples for each type. So an overview of these five types first. Type one, single industry towns. Type two, oversupplied areas.

Type three, lifestyle suburbs that boomed during the pandemic but is now at an unfavorable cycle position. Type four, blue chip suburbs. Type five, affordable but could be risky suburbs. Now let's go through them one by one. So type one, single industry towns.

By single industry, I mean the local economy is heavily reliant on one industry in terms of both output and employment. And the risk here is inconsistency in both the performance in the sales market in terms of growth and in terms of cash flow. So our first example town here or suburb here is Townview, Queensland 4825. Please don't confuse it with Townsville. It's different suburbs.

Townview is the largest suburb in the regional Queensland city of Mount Isa. Mount Isa is a textbook city, high affordability, high yield, but high risk market. Townview's median house price now is just $241,000 with a gross yield of an average yield of 10%. On paper, they look amazing. But the problem, the issue with Townview is the inconsistency in its vacancy rate.

We're not even talking about growth. Vacancy rate in Townview has been swinging over years. Before 2013, when the mining industry was really active, vacancy rate in Townview stayed at around 1%, nice and tight. But then after 2013, it surged to as high as 5. 5%.

And that took it almost a decade to come back down to a healthy level. As a result, rental properties vacancy period surged, rental growth slowed. And if you had an investment property there, your actual cash flow could have been seriously damaged. So the big swings in vacancy rate is because the local employment or local economy is project driven. When a mine is under construction or being operated, housing demand would be high.

And once a project is over, you would be losing a lot of population and a lot of housing demand. That is why over years we see all these big swings from time to time. And then the second example is in New South Wales. You might have guessed it is Broken Hill. Similar to Mount Isa, Broken Hill is also famous for its affordability and high yield.

Currently, the median price for house is $220,000. Rental yield is 8. 8%. A lot of people are actually attractive to Broken Hill because of these. But it is still risky because of the mining reliant industry.

Similar to Townview, vacancy rate has been swinging over time, affecting the real cash flow a lot. And at the same time, the local economy is not growing. In fact, it's actually shrinking. In the past 25 years since 2001, the state of New South Wales' economy has increased by around 60%. At the same time, Broken Hill's local economy, which is measured by GRP, Gross Regional Product, has decreased by 30%.

That is a clear sign that the local economy is not diversifying, at the same time not expanding, not strengthening. Our second type, oversupplied areas. As we all know, oversupply kills growth. The first example is Angel Vale, SA5117. It's a suburb in the city of Playford in Adelaide.

It's actually an example showing that even in a really hot market, oversupply couldn't lead to slow growth. Looking at satellite map, you see a lot of vacant land to be developed in this suburb. And looking at ABS data, you see that the new house construction building approval rate is 28%. That's an extremely high level if we consider 2-3% as the balanced level. Because of the high incoming supply level, vacancy rate is now 6.

9%, much higher than the national average of just 1. 1-1. 2%. And also because of this high level of supply, we're not seeing impressive price growth. In the past year, Angel Vale's house prices have increased by 8.

9%. So at first glance, it seems really good. It's actually higher than the long-term average. But we need context. In the past one year, the LGA of Playford's median house price actually increased by close to 40%.

So compared to that 40% increase, Angel Vale's 8. 9% is too low, and it's not in line with its greater region. And another reason why Angel Vale is one of the worst suburbs to buy in is because of the lack of reliable data. And that is because it's a newly developed suburb. In ABS's census data, rental properties only represented 5% of the total number of dwellings in this area.

But in 2025-2026, that number can't be true anymore. I went to realestate. com. au and searched for properties for lease. It gave me around 15 results.

And 15 properties actively for lease in under 2,000 houses, that is not indicating just a 5% rental property proportion. The fact is, in the past two, three years, the affordability of this suburb has attracted a lot of investors buying here, which has pushed rental property percentage a lot. To make it clear, rental property percentage is not a huge influencer of value growth or rental growth. It's just one of the influencers. But I'm using this as an example to show that when a suburb is new, many data of it might not be the most reliable to help you make decisions.

And then the next example is Rockbank, Victoria 3335. It is a small suburb between the Melton town center and the Melbourne metro area. The incoming supply is even higher than Anglevale. New house building approval rate is now 45%. And vacancy rate is as high as 8.

6%. That high vacancy rate has led to 37 days rental days lease days on market. And that is more than five weeks. Significantly higher than the rental days on market in established suburbs, such as in the Melton town center or even just its next door suburbs, which are well established. And then the high incoming supply is also leading to high inventory in a sales market, which is affecting near term price growth.

Rockbank's last one year house price growth was actually minus 3%. It declined by 3%. In comparison, if we look at a established area, suburb in the Melton town center area, Kurungjang, house prices there actually have increased by 10% on average in the past year. So that's the impact of oversupply on property value growth. The third type we're talking about is lifestyle suburbs that are at an unfavorable cycle position in 2026.

By this, I mean suburbs that have surged crazily during the COVID period when lifestyle attracted much higher housing demand. And after that booming period, these locations are needing longer time to recover, to correct compared to other cities. The two suburbs we're listing here are one in Victoria and one in New South Wales. In Victoria, we have this St. Andrews Beach in Mornington Peninsula.

The current median house price is 1. 3 million. It is experiencing really low market pressure, despite that Greater Melbourne is on its way to recovery already. Days on market is now still 118 days, and it's not even declining. In comparison, Greater Melbourne's median days on market is just 36 days.

Inventory is still high at 9. 2 months of stock, and it's actually still rising. As a result of the loose market pressure, the last three months, house prices actually declined by 17% in terms of a three-month rolling median. And because of the high median price now, we're just looking at a rental yield of 2. 8%, and that is much lower than Greater Melbourne's average.

One reason that we may not even consider it at another time when market pressure has recovered is that long-term rental demand is actually low in this area. In St. Andrews Beach, 45% of its local homes are holiday homes, and in the rest 55% homes or houses, only 11% are for long-term rental. The rest are all owner-occupying homes. And on top of that, vacancy rate is showing that demand is not even catching up.

homes, and in the rest 55% homes or houses, only 11% are for long-term rental. The rest are all owner-occupying homes. And on top of that, vacancy rate is showing that demand is not even catching up with this low amount of supply. Vacancy rate is now 3%, much higher than Greater Melbourne's average. And then the next example is Boweral in New South Wales, one of the major towns in the Southern Highlands region.

Median house price there is also high, 1. 5 million. Similar to Mornington Peninsula, we are seeing low market pressure here as well, despite that many regional New South Wales towns have been actively recovering in terms of market pressure and price growth. Inventory now is 8. 3% and it's still rising.

Days on market, 100 days. It's declining, but 100 days is actually very high. And as a result, in the past three months, we haven't seen any growth in its house value. So overall, the property market is not actively improving or recovering yet. Several reasons why market pressure is not actively increasing.

One reason is cycle position. It simply needs more time to recover because of the crazy boom three years ago. Another reason could be that the biggest attractive point of this town is lifestyle. It doesn't have other demand drivers such as employment opportunities or affordability. When I say it doesn't have employment attractiveness, I mean this town is essentially a retirement destination.

Median age of the local residents is 55 years, much higher than Australia's average of 37. So the local economy and the job market are not as active as many regional hubs with growing job opportunities. The fourth type is blue chip suburbs. Many people may think that blue chip suburbs are always one of the best choices to invest in, but in 2026, at least they are not. They're actually one of the worst.

The first example is Gordon in Sydney. It's one of the blue chip suburbs in Sydney's upper north shore. It's surrounded by some of the best public schools in Sydney. So it's attracting a lot of families, attracting a lot of well-educated families, middle-class families especially. House prices there are really high with a median of $3.

7 million. Market pressure now is actually low. Days on market is 64 days. Relative to Sydney, it's a high level and it's actually also rising. Inventory 3.

4 months of stock. It seems like a balanced level, but if we consider that traditionally this suburb is highly sought after 3. 4, which is just in line with greater Sydney's average, is actually a relatively high level. Auction clearance rate is just 39%, almost one of the lowest in the greater Sydney area. As a result of the low market pressure, in the past one year, we saw a 1% decline in its median house price.

Rental yield at the same time, really low, 2. 2%. So even if you're not after capital growth but cash flow, it won't be a good choice. A side note on Gordon, the house rental demand is actually not as high in this area. If you're considering investing in houses instead of apartments, house rental days on market is now 35 days, that is five weeks.

That's a long time. In comparison, apartment rental days on market is just 22 days, that's three weeks. That comparison is not showing that apartments are a better choice to invest in. It's actually showing that rental demand is not uniform from region to region. When we make investment decisions, it's worth it to consider whether a suburb market you're looking at is a good house rental market instead of just looking at the surface, how attractive the lifestyle is or how attractive the local schools are.

The next example is an even more blue chip suburb, Turak in Melbourne. It's arguably the wealthiest suburb in Melbourne and median house price there is now $5 million. While the greater Melbourne area is recovering in market pressure, Turak is not really recovering. Inventory in Turak is now six months of stock and it's already higher than Melbourne's average, which is around three to four. And besides that, it's been increasing over time.

Auction clearance rate, slightly better than Gordon's, but still 56%, a relatively low figure and also one of the lowest in Melbourne as Melbourne's auction market is really heating up. Last one year growth, 7% decline actually because of the low market pressure. High price, just average rental price have led to an extremely low rental yield, just 1. 7%. So if you would like healthy cash flow, Turak is not really a good idea.

Just like Gordon, house rental demand in Turak is not really high, most likely because of the high rental prices and also affluent suburbs like this. I mean, their house markets usually attract owner occupiers, not really renters. House rental days on market is now 34 days, approximately five weeks, and apartment rental days on market is just 20 days, significantly shorter than houses. So this type, the blue chip suburbs, they're not performing really well in 2026, partially because of the high interest rate. High priced markets like these are especially sensitive to interest rates.

So it is actually understandable that their market pressure is much lower than the more affordable markets in the same city or same region. But over the long term, they won't become one of the top markets to invest in either because of the low rental yield leading to really unhealthy cash flow and the low house rental demand. And the last type, affordable but potentially risk suburbs. In this type, I mean suburbs that are seemingly cheap, but actually they do not pass due diligence checks or DD checks. The first example here I have is Depot Hill in Rockhampton.

Median house price there is $350,000. That's much lower than Rockhampton's city median of $615,000. Inventory is not bad, 2. 2 months of stock and one year growth, not bad at all, 34%, likely because of its affordability. But this is still one of the worst suburbs to look at because of its flood risk.

This area is among one of the most flood prone areas in Rockhampton City. According to a Central Queensland University research, it's almost entirely inundated at least once every 26 years. 26 years doesn't sound really bad, but notice that when this area is entirely inundated. In reality, the frequency of it being affected by floods is much higher. And also in recent years, because of the climate change, we are seeing more and more unpredictable weathers.

So for suburbs like this, it is actually becoming riskier. So because of the flood risks, insurance premium would be higher for houses in this area. And if it's getting hit by floods more frequent, insurance premium would be increasing even faster over time. So even when purchasing cost could be lower at this time, your long-term holding cost could be changing totally out of your control. And the next example of this type is Lismore in New South Wales.

Just next to the famous Byron area, its median house price is actually very affordable, $525,000. And because of that affordability, past one-year growth wasn't bad at all, 16% year-on-year growth. However, affordability cannot make it one of the best choices because again, it faces flood risk. A large portion of this suburb is prone to flood. Insurance premium can be extremely high.

Actually, the lower property prices are reflecting this flood risk. If we look at surrounding suburbs like Lismore Heights, which is much less flood prone, median house price there is much higher at $670,000. And the last one-year growth was just 2%. So sometimes affordability doesn't mean great opportunity. It could be simply reflecting risks.

So those were the five types and 10 suburbs that are worth to buy in in 2026. They actually reflect what we want to check whenever we buy a property. First, we want to check the economic health of the whole city. We don't want to buy in a single industry economy. And then we want to check the demand supply dynamic.

We would like healthy demand and not too much supply that could impact value growth. And then we also want to check the market cycle position to make sure that this market at this time suits our portfolio growth needs. And we do not want to be led by myths such as blue chip suburbs are always the best. And in the end, it is extremely important to do due diligence checks because sometimes even when a suburb looks really attractive in terms of price, cash flow potential, they may be prone to serious risks. And just before we finish, one thing I would like to mention is that in these 10 suburbs, there are suburbs that can't be the most ideal suburbs to invest in at any time.

There are also suburbs that once the risk is removed, for example, the oversupplied areas, they can become a good or ideal market to look at in the future or when we're at a different cycle position. So markets are always changing. That's why we are constantly monitoring the data to make sure that every decision we're making is the best, the most informed decision at the moment. I'm Joma, the senior research analyst at InvestorKit. I'll see you next time.