Investment suburbs: How to find the best

Convenient access to amenities

If you want to invest in a property with considerable appeal to a variety of future buyers, focus closely on the amenities available in that suburb. These should be within walking distance or a short drive. Some examples of key amenities include schools, child care centres, shops, parks and hospitals.

Each of these amenities provide tenants or future home-owners with a degree of convenience. In particular, families typically look to live in an area close to a number of schools. This gives them greater choice and flexibility, while prompting them to stay longer in these areas and limiting vacancies.

High employment and low crime rates

Employment levels are one of the best indicators to gauge whether you are likely to have tenants who pay their rent on time. It may also indicate the availability of opportunities in the vicinity, which can be especially important in regional cities. Diversity of job industries may sustain a local economy, which in turn supports population growth and boosts demand.

Unemployment may also be a lead indicator for other issues such as crime. Sometimes there is a correlation between the two metrics. A suburb with low unemployment and low crime is likely to have greater appeal to a broader pool of long-term tenants including families. Suburbs with high unemployment have the potential to weigh on property prices if it is because of limited local opportunities, while areas with high crime should be avoided since they may have a higher vacancy rate.

Good public transport infrastructure

While most households still have access to a car, new vehicle sales in Australia have declined for 20 consecutive months. Many younger people are turning away from vehicle ownership. Furthermore, a growing eco-trend and increasing costs of vehicle ownership are pushing people towards public transport as urban sprawl intensifies.

This means that renters nowadays place a high priority on access to public transport, which supports rental yields. A good investment suburb should offer a mix of public transport options that make it practical for residents to access employment centres and recreational facilities.

Neighbouring population growth and gentrification

Suburbs experiencing population growth and gentrification indicate that there is increased demand in those areas. Much of this comes from new development, rezoning and sub-division, which then leads to an increased presence of bars, restaurants and cafes.

However, there is also migration taking place in regional and coastal areas due to lifestyle preferences. This growing trend supports investment in these areas. Where there is a fixed supply of housing, this imbalance between supply and demand can help underpin an increase in property prices.

For those who have been able to secure an investment property in these sought-after markets, the returns have been compelling. However, if you are finding it difficult to access supply in an area with high appeal, you may want to look ‘next door’. One option is to consider neighbouring suburbs or regions which stand to gain from demand ‘spilling’ over because of limited supply. This is known as the ripple effect.

Neighbouring suburbs often share similar access to amenities and infrastructure, yet may offer a more accessible entry price into the market. Price growth in the leading suburb can flow through to neighbouring suburbs as demand shifts to these areas.