Blog How to choose a suburb for growth

How to choose a suburb for growth

05 June 2018

It’s important to consider the future value of the property from the very beginning when purchasing. A major factor in determining the value of a property is the suburb in which you choose to purchase.

There are some key factors that will indicate whether a suburb is likely to experience growth in the future. Use the below checklist to help you decide which suburb to begin your search for your next investment property purchase.

1. Timing

If the suburb you are looking to buy in is already running hot, with property prices in the upper range of what the market expects, take a moment to consider whether it is the right time to buy in that location.

Ask yourself, if I sell this house in the coming years, is it going to give me good value for money?

If you are looking to purchase in an area with an overly competitive property market, the chances are the value of the home may not increase as much as a property in a nearby suburb might. If houses in an area are at a price peak, it may be 7-10 years before they experience any further growth.

2. Research current trends

Another method of choosing a suburb for growth is to look next door to the boom suburbs. As supply gets tighter in sought-after areas, and prices get silly, buyers tend not to look too much further afield to find their dream home.

The result is a cascade effect of growth in property prices that ripples through surrounding suburbs and can deliver the savvy buyer a good return in years to come. It means you avoid paying an inflated price in a boom suburb but enjoy all the amenity of living nearby.

3. Avoid Market Saturation

Another way to get the boom to come to you is to identify an area with a mix of established dwellings, and a limited amount of land for redevelopment. If there are new subdivisions going in, or high rise apartment complexes planned for future years, the market will be saturated with available properties. As a rule, the more housing stock is on the market, the more your return will be diluted should you want to sell.

4. Opt for desirability 

A good indicator of desirability of an area is if it has local schools, good transport links, and community facilities like parks. Shopping and dining outlets nearby will also add value, and if the retail strip is tired, the likelihood is it will be slated for rejuvenation in years to come. That will push up local property prices and help to increase your return.

There is plenty of data available to give you information about community demographics, property values by suburb, and planning forecasts for infrastructure and residential development. Armed with this information, you are well placed to make an educated decision about where to buy, and how much to pay.

5. Think outside the box

Don’t restrict yourself to buying in one particular suburb/area, especially if that area is particularly sought after. If you are interested in getting a return on your home in years to come, it can sometimes be best to look outside your initial suburbs of interest.

If you’re thinking about purchasing an investment property, get ahead with a loan pre-approval today.

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