Expert advice on how to spot the next boom suburbs
From first home buyers to investors, choosing a suburb with growth potential is all about research and timing.
The early stages of gentrification – the urban renewal of deteriorated areas and the influx of aesthetic changes it brings - is something most people know to look for, however a range of other factors can also determine whether a suburb is set to boom in value.
Tim Lawless of CoreLogic RP Data said there were a few clear indicators to help predict where future property growth may be.
Looking at data such as time on the market and vendor discounting was the first thing.
“When the number of days (a property) takes to sell and the amount sellers had to reduce from their original asking price drops, it usually means demand is picking up in a suburb,” he said.
“Essentially what we are looking at here is the balance between buyers and sellers.
“Those suburbs where sellers are becoming more empowered, you are going to see price growth in those areas.”
Mr Lawless said lower listings numbers could also mean the market place was tight in terms of supply in the area.
“This can often result in more competition which can drive prices higher,” he said.
Suburbs located next to strongly performing suburbs are another indicator of future growth, particularly within and around 10km of the CBD.
“These suburbs may undergo a ripple effect in price growth.
“If there is no reason for the current lower values it’s worth looking at because as buyers are priced out of popular areas they often look to neighbouring suburbs. And as a result, prices can start to grow,” he said.
Major infrastructure projects can also signal a suburb will grow in value. New roads, tunnels and shopping centres often drive up property prices in the surrounding area. Mr Lawless cautioned against buying on top of it, however, and said timing was crucial as the chance to take advantage of the price growth usually disappeared once the work was completed.
Other indicators include looking at demographics as younger generations tend to flock to up and coming areas, and seeing a higher percentage of properties being auctioned off, as real estate agencies often sell properties by auction when the demand is strong.