Good news for investors on a budget - the best growth markets are the cheaper ones: Terry Ryder

Good news for investors on a budget - the best growth markets are the cheaper ones: Terry Ryder
Terry RyderDecember 7, 2020

There will always be property “professionals” willing to stand up and declare that the prime inner city suburbs are not only the best places to buy, but the only places to buy.

They will sit down only if someone asks them for some hard evidence to support their claims. Through decades of observing people with a vested interest or a bad case of real estate snobbery claiming so-called prime property has the best growth rates, I’ve never seen anyone back it up with research.

My own research contradicts the claims of the supremacy of “prime” property. The top end markets never produce the best long-term capital growth rates. In most of our capital cities, the lists of best suburbs for long-term growth are dominated by the affordable end of town.

For affordable, read downmarket. Across Australia right now, there are downmarket locations on strong growth paths. The number one market in the nation, according to Hotspotting research for The Price Predictor Index, is Logan City.

I wrote at length about this area last month. In discussing the general prospects for South East Queensland, I wrote: “There are myriad options but one that I particularly fancy is the unheralded (indeed often maligned) municipality of Logan City. The local council sees it as a strategic “city between two cities” because Logan bridges the gap between Brisbane City and Gold Coast City. It’s a municipality of 60 mostly affordable suburbs and collectively they are a nice fit for my core formula of affordability + infrastructure + jobs = price growth.”

Since then our research has found that Logan City has more suburbs with rising sales activity than any other municipality in Australia. Four Logan City suburbs make our national Top 30 list for suburbs with seriously forward momentum.

In Sydney, there are growth markets spread across the metropolitan area, some top end, some middle market and some bottom end. One that stands out as a market trending rapidly north is the Campbelltown LGA. Together with neighbouring Camden, it forms the single strongest precinct in metropolitan Sydney at the moment.

Other Sydney markets that continue to be strong include the local governments areas of Penrith, Blacktown and Liverpool.

Adelaide continues to fly under the radar of most investors, but the city is rising steadily – indeed, has been for the past 12-18 months, in terms of sales volumes. Towards the end of last year, we saw the first signs of that translating into price growth.

Within Adelaide, the number one area is the Salisbury municipality, which has more grown markets than any other precinct in the South Australian capital. The Salisbury LGA is about as downmarket as you can get, anywhere in capital city Australia.

The other standout markets with rising activity in Adelaide are all bottom-end precincts or middle market areas.

The generalised numbers for Perth depict a market that is stagnating or going into mild reverse. But beneath of the citywide statistics there are numerous sub-markets with growth trajectories. They are mostly bottom end affordable areas, like Wanneroo in the far north, Armadale in the south-east and Rockingham in the south-west. One or two are middle-market areas.

Last week I wrote that middle Melbourne is leading the way in residential property in the Victoria capital. But there are also several bottom end precincts with strong growth momentum. They include the municipalities of Epping in the north, Casey in the far south-east and Brimbank in the west.

That’s not to say there are no top end areas doing well in capital city Australia. In addition to the rise of affordable precincts a long way from the CBD, Sydney has a number of buoyant areas among the million-dollar-median suburbs. The numbers suggest that the millionaire suburbs surged in 2013, peaked in the December quarter of that year, subsided somewhat in the first half of 2014 but staged a marked sales revival late in 2014 and early in 2015.

Another standout is inner city Sydney. The Sydney City LGA includes a dozen highly-active suburbs, predominantly with sales of apartments.

But the good news for investors on a budget is that most of the growth markets in our cities are the cheaper ones.

TERRY RYDER is the founder of hotspotting.com.au. You can email him or follow him on Twitter

Terry Ryder

Terry Ryder is the founder of hotspotting.com.au.

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