• How to spot an emerging suburb

    How to spot an emerging suburb

    The changing face of first home buyers

    Despite the headlines, it is not necessarily all bad news for first home buyers trying to get a foot onto the property ladder. 

    First home buyers come in all shapes and sizes - not just young couples with a baby on the way, looking for a house with a backyard. The type of housing accommodation has shifted to include a diversification of established homes (detatched houses), dual occupancy dwellings on subdivisions (duplexes), townhouses, new apartments, new build housing estates or older style units/apartments.

    The benefit of buying in an emerging suburb

    Whatever price point, dwelling type or geographical area a first home buyer is considering; an important objective is to build capital growth by focusing on what I call an ‘emerging’ suburb or area. 

    Over time, this can translate to increased equity which can be used to move up the property ladder.

    What an emerging suburb looks like

    So, how do you spot an emerging suburb that gives first home buyers that extra kick?

    The fundamental drivers of real estate growth are the access to employment, amenities and the sense of community that exists within an area or suburb. 

    In short, this can be described as an area’s ability to locate people relatively close to employment options, arterial and public transport infrastructures, educational and recreational options and, how this all combines into a cohesive and comfortable place for people to reside.

    Obviously these characteristics will be more developed in established areas and ultimately reflected in local property prices. 

    The gentrification of many inner-city suburbs has increased buyer demand and price growth into these areas with the flow-on effect increasing buyer demand into neighbouring areas, which may have previously been seen as less desirable.

    This has also taken place in middle suburbs and continues to push into outer regions of our capital cities and major regional centres, especially as dual occupancy and townhouse development starts to drive property growth.

    The key is to identify these areas that have already ‘taken off’ and get ahead of the curve, by identifying areas that will get the benefit of that next wave of buyer demand.

    Observational signs of an emerging market 

    • Increased residential investment such as renovations
    • Improvements to streetscapes/roadways
    • Increased public transport options
    • Development activity (subdivisions, apartments/townhouses)
    • Re-zoning and new retail options
    • Cafes and repurpose of existing commercial rentals
    • Shift in demographics – new families, younger population
    • Cultural and ethnicity shifts 
    • Increased number of recreational facilities 
    • Pedestrian foot traffic
    • Sense of increased activity 

    Formal indicators that identify an emerging suburb 

    • Growth in median house prices
    • Increase in rental yields
    • New building permits
    • Increase in apartment/subdivision sales

    About the author

    • Andrew Wilson

      Dr. Andrew Wilson, Senior Economist for Fairfax-owned Australian Property Monitors and Domain.com.au is our numbers man on The Great Australian Dream. As a leading commentator on the Australian property market, specialising in housing market analysis, Andrew has a strong following with weekly columns in the Sydney Morning Herald and Melbourne Age.

      Throughout the series, Andrew will help home buyers understand what the numbers really mean and reveal the forces driving the Australian property market whilst breaking down the jargon along the way. Dr Andrew Wilson has previously held senior property and construction research positions within industry, academia and government as well as holding a PhD and Masters in Research in Housing Market Economics.

      Andrew Wilson

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    The information here is of a general nature only and is not intended to constitute financial or tax advice. You should consult your professional adviser, accountant or taxation expert for advice specific to your personal circumstances.

    The views and opinions expressed in this article are those of the author alone and do not necessarily represent the views or opinions of RAMS Financial Group Pty Ltd ABN 30 105 207 538 (RAMS),  Westpac Banking Corporation ABN 33 007 457 141 (Westpac) or their related bodies corporate. This article is strictly for information purposes only and neither RAMS, Westpac nor any of their related bodies corporate make any representation as to the accuracy or completeness of the information in this article or endorse the views expressed in it.