How to spot a growth suburb
Whether you’re buying an investment property or a home to call your own, growth suburbs are considered the holy grail when it comes to increasing your net worth via real estate.
Although it’s not an exact science, properties in these areas tend to increase in value over time and it’s an attribute most people seek when it comes to investing in property.
The big question is how can you find one? Here’s how to spot a growth suburb, including the research involved.
What is a growth suburb
A growth suburb is one that tends to currently be under-capitalised.
Often, these areas allow you to purchase a property at a relatively affordable price with the aim of that suburb rising in value within the foreseeable future
In the end, it means when it comes time to sell, you should realise a decent gain on your investment, allowing you to move up the property ladder or take the next step in life with some additional cash in your pocket.
It’s important to remember, Australia’s real estate market historically rises in value over time, but some areas increase at higher rates than others due to their ‘growth suburb’ status.
It’s also important to acknowledge, picking a growth suburb is not an exact science, and it should be considered within the context of how you intend to use that property and what you’re trying to achieve financially.
That said, here are the key clues a suburb and the properties within it are poised to increase in value.
Gentrification
If there’s lots of work going on in a suburb in terms of people making improvements to their homes, that’s a key sign a suburb is being recognised as a growth area.
Often, this shift coincides with a change in demographics. So, an area might have been less appealing in the past, but now it’s attracting houseproud homeowners who are investing in improving or renovating their property.
Meanwhile, another sign of ‘gentrification’ is an increase in service businesses along with cafes and restaurants.
Property supply and demand
Supply and demand plays an important role in the property market, with limited supply often resulting in increased prices.
As you’re researching areas, take a deep dive into the available data of how many properties are on the market, the median price these properties are commanding (including whether that price is on the up), and how many active buyers are researching the area.
A trusted real estate agent will be able to assist with this, while the data is also readily available on real estate portals such as realestate.com.au, domain.com.au and propertyvalue.com.au.
Vacancy rate
While you’re looking at data, take a peek at the rental vacancy rate and also a look at rental prices and whether they’re increasing.
A rental vacancy rate below 2 per cent indicates an area is in high demand, with demand for rental properties outweighing the supply of available stock.
Bridesmaid suburbs
Love an area but the horse has bolted and its value has already gone through the roof? Take a look at the suburbs around it.
Known as bridesmaid suburbs, these areas offer access to a similar lifestyle and amenities, but their potential hasn’t been realised quite yet.
Planned infrastructure
Planned infrastructure and developments also offer a key clue as to whether a suburb is about to become a hotspot.
Check the local council for things like:
- Planned housing developments
- Planned retail, medical or educational facilities
- Planned improved transport routes or additional transport infrastructure
How we can help
If you’re considering buying or selling a property, why not chat with one of our friendly agents to understand the state of play in your local market?
We’re not just about property, but the people and the stories behind it. You can also view our list of currently available properties here.
