Across the nation house prices are continuing to drop, with some areas expecting further falls of 10 per cent.

And while many are feeling the pain of the downturn, one analyst has identified 15 key suburbs set to experience higher-than-average growth over the next three years.

The research from Sell or Hold has looked at suburbs with median house prices between $400,000 and $600,000 and identified the most- and least-affordable areas for forecasted house price growth.

The top five locations with the best prospects of a price upswing over the next three years were suburbs in Canberra, Gold Coast, Brisbane and Hobart, where investors could be better off by between $89,000 and $123,500 within three years, head of research Jeremy Sheppard said.

“The Canberra-Queanbeyan region has taken out the first and second places for forecast price growth, partly due to affordable house prices close to our nation’s capital,” he said.

Mr Sheppard said low growth forecasts were common in a number of suburbs in Darwin and Perth, which means that investors would likely be better off looking further afield.

Perth had 10 in the top 15 lowest-growth locations, with Henley Brook coming in second after Rosebery in Darwin.

“The research showed that vainly holding on to properties in some of these locations could see your property wealth erode every year,” he said.

“Savvy investors recognise that, even after transactional costs, they could potentially be better off by tens of thousands of dollars in a handful of years by simply literally cutting their losses.”

Before investors jump out of struggling markets, they really need to take in the whole picture, said Mr Sheppard.

“There are some complications. Let’s say you’ve got two investors in Henley Brook, one could have bought there for $50,000 and now it’s worth $500,000.

“That means they’ve got a huge capital gains tax, and if they were to sell it might be a bad decision. The other, who say bought five years ago, they might not have that huge capital gains tax.

“Investors need to consider their full financial status. It’s not as straight forward as following a list.”

The trick to not buying a dud

Ideally, investors would avoid buying a dud altogether, though it’s hard to do, said Hotspotting founder Terry Ryder.

“Of course, not buying a dud is easier said than done. Whoever has been investing for a time will always have had one unsuccessful property. There will always be a dud. Nobody escapes it.”

Avoiding a bad investment purchase may be difficult, but prospective buyers can look at key things, said Suburbanite director Anna Porter.

“It’s about investing in areas that are supported by the key growth indicators: Infrastructure, employment diversity, economic growth and population growth.”

Don’t sell properties out of fear and avoid single-industry areas, Ms Porter said.

“Rural locations, areas reliant on tourism or mining, tend to get hit hard. Areas with a single industry or lack of industry should be avoided,” Ms Porter said.

Checking out vacancy rates and the level of building approvals will also help you determine where prices are going in the future, Mr Ryder said.

“You might have an area where a vacancy rate is good, but building approvals are high, and that could mean the area is about to have an oversupply.

“The other way is to monitor sales volumes, because sales trends will change first and prices will follow.”

But before you make a snap decision and sell up, investors and home owners really should consult an expert, he said.

“Too many people just see a headline and they dive in and end up making a mistake,” Mr Ryder said.

“I think the common mistake most people make is that they don’t do enough research and they’re not willing to spend money on good advice.”