Top Growth Drivers for Potential Investment Suburbs

Given the slump of the global economy, property investors will be forgiven for feeling a little gun shy when considering adding to their investment portfolios. Despite the continual downward pressure on property prices, there are some suburbs which are flourishing in the tough market. 

Here are four key drivers which demonstrate the likelihood of there being an upward surge in capital growth for that suburb:

1. Lifestyle Factors

Typically properties located in suburbs close to “lifestyle” factors, such as the city, beach or views have achieved high capital growth however this also pushes up the cost of the property which in turn decreases the numbers of those who can actually afford it. The properties now moving the most are those which are “near” these lifestyle factors rather than right in the thick of it as people are starting to demonstrate their willingness to forgo lifestyle in exchange for access to the next point, good infrastructure.

2. Good Infrastructure

Properties situated near solid or developing infrastructure have also had a history of performing well as they add to the appeal for homeowners. Good access to public transport and freeways make life much easier for those who have to commute into the CBD and worthy of taking into consideration as their appeal will be greater to potential tenants. Tenants are less likely to be interested in properties in suburbs which are hard to access.

3. Gentrification

Some suburbs, while close to the city, have previously been considered undesirable due to their bad reputation or connections to industry or criminals. They are now being targeted by buyers looking for a cheaper property closer to the city and can recognise the signs that it’s about to become a prime area. Signs that “gentrification” is in progress include renovations to homes or shop fronts, the local council getting involved with the addition of “lifestyle features” and infrastructure being approved by State or Federal Governments.

4. Affordability

If you’re an investor looking to achieve solid capital growth in the next five years, it will most likely be achieved in the bottom end where there is opportunity to catch up. It would be wise for buyers to concentrate on areas that are underdeveloped compared to their neighbours and do the research to find out why. If there is no apparent reason why it should be, it is only a matter of time before affordability pushes buyers into the areas from more popular suburbs.

For advice on up and coming areas for potential future investment in your area, contact your local Stockdale & Leggo Agent to discuss.