Identifying Growth Suburbs

Property prices across the country are rising dramatically in 2021. However, there will be some suburbs that outperform the rest.

When you set out to buy a home or an investment property, it’s well worth taking the time to analyse the different suburbs that are of most interest to you and try and find the one that could outperform.

Supply and Demand

On its most fundamental level, house prices will rise fastest in areas where demand outstrips supply.

Across the country, we are seeing many suburbs where supply is very tight, thanks to a low level of listings.

Generally, a good way to assess the supply side of the equation is by looking at how many listings are available in a suburb. You can then compare that with how many sales there are over the course of a year.

If you’re buying a property, you want to identify a suburb that has few listings and high annual sales. That suggests there is strong buyer demand and few properties for sale.

The second part of the supply and demand equation is based on the type of property you’re buying. If you are looking to buy a commercial property in an off-the-plan high-rise, you have to consider the fact that there is not any real supply shortage here. That oversupply of properties that are all exactly the same will clearly weigh on price going forward.

The same thing is true in new housing and land developments in the outer suburbs of most cities. There is no supply pressure here either, so these types of areas are not likely to grow in any meaningful way.

Look for the established suburbs with tight supply and steady demand.

Amenity

A suburb sees property price growth over time because people want to live in that area. If you were to buy a home, what would you consider to be the most important things about a particular suburb?

It could be that the suburb is in a good school zone, it might be near the beach or a river, there could be great shopping options or a great cafe and restaurant strip.

It’s these types of factors that boost demand and will see prices rise over the long term.

Zoning Changes

One of the most important elements of a property or piece of land is what you’re able to do with it.

Across Australia, councils have different rules pertaining to what you can build on your piece of land, based on its size and the overall zoning. These rules can be enforced at the local government level or state level.

Simply put, the more things you can do with a piece of land, the more valuable it becomes. Think about a vacant block of land on which a developer could build a 20-story apartment building. That piece of land is much more valuable than a parcel of land the same size on which that type of development is not allowed.

Before buying a property, think about what you might be able to do with it. You might not be able to afford to develop a 20-story building, but if the zoning allows for it in the future, you might be able to sell it at a handsome profit.

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