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Last week, I unpacked some of the best locations with three different budgets, $650, $850, and $1. 2 million. This week, we're going to talk about where you shouldn't buy with a budget of $600, $900, and $1. 2 million. I'm going to give you a peek inside of the data me and our team of analysts put together to show you which locations you should be running from if you're investing with any of these budgets.
I'm Junge Ma, lead research analyst at InvestorKit. Let's get into it. So in this episode, we have selected one region for each budget that you better not put your money in either this year or any time. Now, $600,000. And the region we selected is East Pilbara.
It's a mining region in WA, and the major town there is Port Haven. The local economy is quite mining-reliant. To give you a context, 49% of the local residents work for the mining industry directly. The combination of a small town and a mining-reliant economy can be the worst. To illustrate it, let's compare the property price growth over the past 20 years of East Pilbara versus Greater Perth.
We know that Perth's property market went into stagnation in 2013 because of the end of the mining boom. In the seven years from 2013 to 2020, house prices there gradually declined by 10%. But in East Pilbara, things were much more dramatic. East Pilbara's house prices reached a peak of $850,000 in mid-2013. And from there, it dropped all the way down to $180,000 in mid-2018.
That's around $700,000 drop in just five years. During the COVID boom, prices there did surge again, but now it is still just around $450,000, way lower than the historic peak of $850,000. So you can see, when you're a small town and your economy is heavily reliant on mining, your property market can be very unstable. And how about short-term growth? Perth, the capital city of WA, was still surging last year, achieving more than 20% growth in 12 months.
But in East Pilbara, prices have started to go down. Median house price decreased by 5% in a year. And then how about rental market? Vacancy rate is now 2. 2%.
Doesn't sound really high, but if we compare it with other regional WA cities or Perth, where vacancy rates are in general lower than 1%, that is actually a much higher rate. And that is proof that the local housing demand is not really high. Rental yield is actually good, 8. 6%. However, to achieve that high yield, you'll be sacrificing your long-term growth stability, and probably your vacancy period could be a bit longer.
So to summarize, for this budget of $600,000, do not buy in East Pilbara because of its mining-reliant economy. Now let's move on to the $900,000 budget. For this budget, the location you don't want to buy in is Shoalhaven. Shoalhaven is an SA3 on the south coast of New South Wales, where the major towns include Nowra and Jarvis Bay. The main reason why we don't want to buy there is essentially because it is still in its correction phase after the COVID boom.
Market pressure is not really recovered yet. House prices really surged during the COVID boom, making its last 10-year annualized growth 128%, which is equivalent to 8. 5% per year. That is way much higher than the long-term average of 5% to 7%. Currently, the inventory is still hovering around 7 months of stock.
There's no clear sign that it's consistently going down yet. Days on market as well. In early 2025, we are seeing a slight downward trend in days on market, but the decrease is still quite slight. In the rental market, vacancy rate dropped from the peak in 2023 to the current 1%. That's quite healthy.
Rental prices have grown by 4% year-on-year, but in recent months, it is not really responding to the low vacancy rate. Rental yield is now 3. 9%. While not the lowest in this high interest rate environment, it's still almost impossible to achieve a healthy cash flow. So in summary, we do not want to buy in Shoalhaven in 2025 with a budget of $900,000, not because of the local economy is weak or there's no good long-term growth.
It's purely because this market is still in a correction phase. Market pressure is not high yet. We do not expect good short-term growth and cash flow is not really healthy. Now moving on to $1. 2 million.
For this budget, the place we don't want to buy in is Malanglo in Canberra. The main reason for this one is that the high building approval rate or incoming supply level could slow down its recovery towards the next growth cycle. In the past year, median house price decreased by 2%. While many other parts of Canberra has been seeing signs of recovery in Malanglo, the signs are weak. First, there's no pickup in the three-month rolling median trend line.
The sale days on market is still quite elevated. There's no consistent downward trend yet. Inventory has come down a bit, but in the past two years, we've seen quite a bit fluctuation. So for this case, we need more time to observe to make sure that the inventory is actually trending downward. Vacancy rate is currently 2.
2%. While much lower than where it was two years ago, it is still higher than the 2% balance level and also much higher than Canberra's average of 1. 3%. As a result of the relatively loose rental market, rental prices only saw a 2% growth in the past year. We were talking about high building approval rate.
So how high can it be? Malanglo is essentially a newly developed area. In the past 10 years, Malanglo's building approval rate has been higher than 20% each year, much, much higher than the balanced level of the usual 2% to 3%. High incoming supply shouldn't be an issue when housing demand is high enough to absorb all the extra supply. But in recent years, housing affordability and the high interest rate have really limited the housing demand in Canberra.
So in this case, Malanglo's high supply level could limit its speed of recovery in the short term. So for the $1. 2 million budget, we're not going to buy in Malanglo because of the potential that its high building approval rate or incoming supply could limit the speed of market recovery. So to summarize this episode, I don't think it's a good idea to buy in East Pilbara for a budget of $600,000 because of its mining-reliant economy. And I don't think it's a good idea to buy in Shoalhaven now for a budget of $900,000 because of its cycle position.
And then I don't think it's a good idea to buy in Malanglo for a budget of $1. 2 million because of its high incoming supply level. For East Pilbara, I won't recommend you buy in anytime. For Shoalhaven, it's not a good time to buy now, but in the future, it can become a hotspot again. And when it comes to Malanglo, when the area is well-established, there is a chance that it will become a hotspot one day.
So tell me your thoughts below. I'm Junge Ma, the lead research analyst at InvestorKit. I'll see you next time.
