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Does your suburb have what it takes to be a top performer? We investigate the attributes of high growth suburbs, and list some ‘up and comers’ to watch out for.
‘Buy low, sell high’ is the golden rule of property investing. And the best way to maximise your investment is by buying into a suburb that delivers above average capital growth. But how can you tell a suburb with good capital growth potential from one without?
“There are a number of golden rules people need to remember when separating the good from the bad suburbs when it comes to high quality property investing,” says Monique Wakelin of Wakelin Property Advisory.
“If you are looking for the real capital growth performance stars of recent years, they are all concentrated in a narrow band close to the CBD of major capital cities and most are or have become blue-chip suburbs,” Ms Wakelin says.
While property values in some suburbs rise and fall as a result of changing fashions or flow-on from neighbouring suburbs, the best suburbs rely on inherent advantages that never change. Use the list below to help identify today’s hot suburbs and tomorrow’s star performers.
Location is arguably the most important feature distinguishing property market “gems”. In Australia, preferred suburbs increasingly lie within a short distance of the CBD (maximum 8 to 10km). In addition, the best performing suburbs are generally close to water – beach, ocean, harbour, and river. Add these factors together and you have the basis of a sound investment.
As suburbs are never homogeneous, buyers should focus on precincts and pockets within suburbs. This is because even the best suburbs have good and not so good areas. Some of the best investments are made by identifying undervalued areas of good suburbs and buying for the long-term.
The composition of your preferred precinct or suburb is very important. The best precincts are those where the residents are predominantly owner-occupiers. Property owners are much more likely to renovate their homes thereby adding capital value to the overall area. Low turnover of stock in the area also adds to values by restricting supply. Avoid areas with transient populations as high rental turnover can depress rents and reduce the area’s attractiveness to potential buyers.
Precincts and suburbs with architecturally consistent and visually appealing streetscapes are more likely to deliver long-term capital growth. While period streetscapes (1800s through to 1940s) are most popular, newer styles are acceptable as long as the housing stock is consistent and of a high quality.
Your chosen precinct should be well serviced by high quality amenities including schools, hospitals, public transport, shops, cafes and recreational facilities. Look for areas that are tranquil, quiet and immensely liveable.
Identify those pockets and precincts that meet the above criteria but are undervalued and undercapitalised. Look for signs of renovation – particularly by younger couples fixing up old period homes. Avoid areas with high levels of speculative development (multi-unit, townhouse) as intensive redevelopment can quickly alter the neighbourhood character and streetscape.
To get you started, we asked experts in Sydney and Melbourne to nominate tomorrow’s property market gems. Here are their tips
Collingwood
North Melbourne
West Melbourne
Kensington/Flemington
Brunswick
East St Kilda
Potts Point Broadway/Ultimo
North Ryde
Lane Cove
Newtown
Enmore
Erskinville
Balmain
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