Investors are being warned to avoid purchasing units in one Illawarra postcode "at all costs".
Property advisory and investment group Suburbanite has released its negative growth report, which aims to highlight the areas that they say should be avoided by investors.
The results could be good news for those looking to get into the Illawarra market, but less so for investors.
Suburbanite founder and director Anna Porter said the report is produced annually to aid investors in avoiding negative growth traps.
Their analysis is based on CoreLogic data.
Suburbanite identified the 2500 postcode (Wollongong/Coniston/Mangerton) as the worst performing unit suburb/postcode in NSW last year.
Mrs Porter said it in 2017, that postcode was actually recording positive growth.
"(However) for the 12 months through 2018, (units in this postcode) saw a -43.9 per cent negative growth in the 12-month period."
Mrs Porter said that the actual housing market within the 2500 postcode hasn't seen a decline, but the unit market has.
"That would be really telling to the supply issues around the unit market and there is a bit of over-supply," she said. "That's capturing a negative growth trend when the housing market hasn't seen that come through yet.
"Any unit market in that postcode, which includes Wollongong and Mangerton, investors should avoid because of the over-supply is… There's still a pipeline, there's still unit blocks coming out of the ground, and that's going to cause further negative growth over the next couple of years in that sector."
The report also notes 'notable NSW declines', which includes Austinmer houses (where values were down 5.3 per cent over 2018) in its 'holiday hotspots’ category.
Mrs Porter said Illawarra investors should be cautious of the markets with over-supply. "The housing market will also start seeing some downturn over the next few years throughout the Illawarra, but that is just a reflection of the cycle that it's in," she said.
"It's not going to be 40 or 50 per cent negative growth like some economists are reporting. It'll usually sit between about five and ten per cent correction.
"So anyone who has bought a property during the past few years and seen the likes of 70 and 80 per cent growth over the past three or four years, that's going to be very negligible.
"But investing now in these areas will see a decline from where you purchased if you're investing in the next 12 months."
Mrs Porter suggested investors perhaps look further afield to other markets, or have a long-term view, "because the asset will go backwards before it goes forwards if you're buying in the next 12 months".
"If investors do want to get into the Illawarra market (despite) those warnings, things they need to look for are good transport, and accessibility to Wollongong and back to Sydney for employment opportunities," she said.
"There's a lot happening around the Shell Cove area with the marina coming through. So that could be an opportunity to capture for the long-term gain."