Experts give their tips on how to pick the suburbs which will have future price growth
WOULDN’T it be great if you could pick the next suburb where price growth was going to take off? Our experts reveal their tips for predicting where they are.
WOULDN’T it be great if you could pick the next suburb where price growth was going to take off?
You could buy in now, sit back and reap the rewards.
Well we don’t have a crystal ball to tell you exactly where that will be, but we’ve asked the experts for their tips on how to read the signs of our next property price growth suburbs.
Tim Lawless of CoreLogic RP Data said there were a few things which could help paint a picture of where future property price growth may be.
PROPERTY DATA
This means looking at things like time on market and vendor discounting.
Mr Lawless said when the number of days it took to sell and the amount sellers had to reduce from their original asking price dropped, that usually meant demand was picking up in a suburb.
“Essentially what we are looking at here is the balance between buyers and sellers,’’ he said.
“Those suburbs where sellers are becoming more empowered, you are going to see price growth in those areas.’’
The latest CoreLogic RP Data figures reveal Jannali in the Sutherland Shire in Sydney was the suburb which had the shortest average days on market out of all the capital city regions in Australia.
Properties listed there take on average just 12 days to sell. There is only one residential property listed for sale in Jannali on realestate.com.au
It is a three-bedroom townhouse which will be auctioned on July 11.
Knoxfield in Victoria is the suburb which has the least amount of vendor discounting out of all the capital city regions in Australia.
On average sellers don’t have to reduce their asking price to achieve a sale.
LISTINGS
“When you see listings numbers starting to move lower that can mean the market place is quite tight in terms of supply,’’ Mr Lawless said.
This often resulted in more competition which could drive prices higher.
RIPPLE AFFECT
Also keep an eye out for suburbs which may undergo a ripple affect in price growth. They are the suburbs next to strong performing suburbs, but which haven’t taken off yet.
Mr Lawless said if there was no reason for the current lower values, it was worth looking at because as buyers were priced out of popular areas they often looked to neighbouring suburbs, and as a result prices would start to grow.
INFRASTRUCTURE
Mr Lawless said major infrastructure projects, anything from new roads, tunnels, train stations, shopping centres and schools, could drive up values. Just make sure you don’t buy right on top of it. And he warned you need to buy at the right time, the chance to take advantage of the price growth usually disappeared once the work was finished.
Hotspotting’s Terry Ryder said he looked at transaction levels to pick areas of future price growth.
Mr Ryder said once transaction levels started to lift in a suburb price growth generally followed.
Based on that formula he tipped Logan in Brisbane’s south as the next area to take off.
Indicative gross rental yields can also be a worthwhile tool for working out whether a suburb is performing strongly and worth investing in.
Wagstaffe in Gosford returned the best indicative gross rental yield of 20.6 per cent out of all the capital city regions in the past 12 months, according to CoreLogic RP Data figures.
Simon Pressley of Propertyologyreckons affordability plays a big role.
“The biggest influence on demand for a commodity is affordability,’’ he said.
He said the best performing locations had lower-entry prices than more desirable locations with bigger price tags.
“For example, over the last fifteen years the Victorian regional town of Ararat with very affordable housing performed better than the affluent inner-city Melbourne suburb of Richmond,’’ he said.
He also looked at industry and how they supported the local economy in terms of employment.
“Where ever there is demand for a job there is demand for accommodation,’’ he said.
“A strong jobs trend is the primary reason for Propertyology forecasting Gold Coast to perform well over the next couple of years.’’
Supply and approvals is also an important consideration when picking future growth suburbs.
“Property is a long-term asset class so our focus as professional investors is primarily on longer-term economic drivers, affordability, and the supply pipeline.