How do you identify the next ‘it’ suburbs before the crowds do? While there is no magic formula, here are five top tips.
1. Transport improvements are planned
According to the president of the Real Estate Institute of Australia, Malcolm Gunning, all hot spots have three things in common – jobs, transport and a good range of amenities, such as hospitals, good schools and shopping centres. This last point is particular important in regional areas.
For easy access to work, entertainment and lifestyle options, good transport links can’t be underestimated. Gunning says up-and-coming hot spots include towns such as Bendigo and Ballarat in Victoria, which are about to benefit from improved rail services and new roads, as well as suburbs near the new light rail in Sydney.
“Anywhere you put in new infrastructure, prices jump,” Gunning says. “You tend to get the leap as the infrastructure commences.” New roads, hospitals, recreational facilities and other public works are a key sign that property prices in the surrounding areas will rise.
That can be due to improved accessibility or because the new infrastructure has improved the liveability of the suburb, while in the case of hospitals, the boost can come from associated job growth in the area. As an example, the new Frenchs Forest-based Northern Beaches Hospital north of Sydney, due to open in late 2018, is expected to create 1,300 positions for doctors, nurses and other staff.
Gentrification happens when high-income and high-spending home owners move into an area previously undervalued or considered undesirable. Signs include a changing demographic in the suburb (such as an increasing number of young residents), houses being renovated or newly built, and new cafes and retailers opening in the area.
In Sydney, the inner-city suburb of Redfern is a prime example – once considered a slum, today it ranks among Sydney’s top 10 ‘hippest’ suburbs, jumping from a median property price of $594,000 in 2007 to 1.6 million.
4. The ripple effect
As popular suburbs become increasingly unaffordable, a good tactic for identifying the next hot spots is to look at neighbouring suburbs. That’s because prices in these suburbs are expected to grow as buyers are priced out of the boom suburbs and into the neighbouring areas.
This is known as the ripple effect and Gunning believes it will soon spread to “the other side of the Cooks River in Sydney, in suburbs such as Canterbury, Croydon Park and Campsie”.
5. Supply and demand
Areas with a low supply of properties but a growing population are likely to experience price growth as more and more people move into the area and compete for the limited supply of homes.
The opposite also applies for areas such as Docklands in Melbourne and South Sydney where an oversupply of apartment developments has resulted in prices plateauing, and in some cases dropping. “Those areas have a lot of property developments that are very similar,” says Gunning. “Even though they are well located, there’s not a lot of uniqueness about them. For anyone who has bought in those developments, you’d have to wait until the stock is absorbed.”