By Aussie State Sales Manager SA/WA David Lock in Adelaide
Property commentators and experts like myself often recommend investment strategies that, for some reason or another, are simply out of reach to the everyday investor.
“Always buy in the inner city”, they suggest, or “always buy houses”! It’s a lovely idea, but not all investors – particularly first timers – have the ability or inclination to spend $700,000 on one investment property.
Enter: the ripple effect. This is where suburbs are generally less expensive than their prime counterparts, but still possess strong qualities that make them investment locations in their own right.
Consider Kensington, SA, which has a median of $460,000 compared to its neighbouring suburb, Kensington Park, which has a median of $683,000.
This small suburb is sandwiched in between the four prime eastern suburbs of Adelaide. The same way that the eastern suburbs in Sydney boast a valued and respected reputation, the eastern suburbs of Adelaide are similarly well sought after by owners.
According to the Bureau of Statistics, roughly half of the homes in Kensington are fully owned or being paid off. In addition, generally properties are cheaper in Kensington because of its famous small cottages on small land and quaint narrow street ways, so its considered a slightly more affordable ‘ripple suburb’.
The ripple effect suburbs offer an excellent opportunity for property investors, as prime suburbs will often facilitate property price growth in neighbouring areas. When rejuvenation occurs in one region, it tends to spread. Therefore the entire area benefits and that’s the ripple effect in action.