Hotspots: New report reveals top 50 ‘growth’ suburbs around the country

Hotspots: New report reveals top 50 ‘growth’ suburbs around the country

The latest Price Predictor Index report from hotspotting.com.au has revealed 50 ‘supercharged’ suburbs and regions across Australia that are tipped to show strong price growth in the near future. As the Sydney and Melbourne property markets cool off, this research shows other regions may be picking up the slack as buyers look elsewhere.

 

The supercharged suburbs identified in the report tend to have a number of things in common. They seem to exist in clusters within a regional area, and the area is often within a commutable distance to the capital city and has a strong local economy of its own. Alongside this there may also be a growing population, increasing job opportunities and increasing expenditure on infrastructure. Ballarat, Wollongong and the Central Coast are all good examples of areas where this is happening.

Hotspotting researchers believe these so-called ‘supercharged suburbs’ should be on the radar for savvy buyers. These areas have had big increases in sales of both houses and units recently, showing the strongest growth patterns across the country over several consecutive quarters.

According to Terry Ryder, property expert and the owner of hotspotting.com.au: “Changes in sales volumes are far more relevant and useful [as a tool for measuring upcoming property market growth than changes in median price]. Medians record the recent past for prices, while sales volumes predict the future … a sustained rise in sales volumes will be followed by a rise in prices.”

Based on sales activity and recent price growth, the Newcastle/Hunter region could be another area to watch. Some suburbs in Newcastle have seen up to 20 per cent price growth in the past 12 months. Mr Ryder believes that nearby areas could follow, such as Lake Macquarie and locations in the Hunter region including Maitland, Cessnock, Singleton and Muswellbrook.

There have also been some surprising sales results in more remote regional towns, including Broken Hill, Griffith, Inverell, Kempsey, Leeton and Tumut in NSW, and Shepparton in Victoria. These towns have seen massive sustained growth recently.

There are always fundamental reasons behind growth. In the case of Shepparton, this is in the strong agricultural district of the Goulburn Valley so the local economy is going well. In addition, a lot of money has been spent on a major bypass nearby as well as a hospital – this creates jobs and improves conveniences, which all feeds back into the property market. In Broken Hill, the rise in property prices is linked to the recovery of the resources sector; to that end we are seeing some small mining towns in WA and QLD starting to turn around as well.

Of course, past performance is not necessarily an indicator of future performance and extreme caution should be taken, particularly when investing in more remote areas where the economy is linked to a single industry.

It would appear the rise in prices seen across the regional areas is linked to the slowdown in Sydney and Melbourne. Mr Ryder says buyers can no longer afford to purchase in these cities, or may no longer feel they are getting value for money.

“Booms can only go on for so long until affordability eventually becomes a factor and the buying demand that’s within that market becomes exhausted,” he says. “Then you have measures from various authorities to take the heat out of the market and these things conspire to bring the up cycle to an end.”

Mr Ryder believes that for investors looking for affordability and better returns, some regional markets are currently very strong and he believes they will continue to do well. The cheaper prices in regional areas also typically means yields will be better than in the cities, so this is a ‘win-win’ for investors.

As well as many regional cities and towns, we might be seeing a turnaround in some suburbs in Adelaide and Perth. Adelaide has had very sluggish growth for a number of years, whereas the Perth market has been in decline since its peak in 2014.

In fact, according to the report, South Australia now has the highest number of ‘growth markets’ in the country. The state has 61 suburbs that recorded quarterly sales growth over the past year, putting it well ahead of Sydney, Melbourne and Brisbane.

Leading precincts in Adelaide include the Port Adelaide Enfield area, and Seaton and Charles Sturt in Onkaparinga. The report also mentions Blakeview and Craigmore in the Playford council area, Green within Tea Tree Gully, and Hallett Cove and Mitchell Park in Marion council. Holdfast Bay and Salisbury each have six rising suburbs as well.

After four years of negative price growth, Perth now seems to be on the verge of a turnaround. The precincts in Perth that are showing notable signs of uplift are top-end suburbs like Bicton and middle-market suburbs such as Doubleview and Gwelup. Local government areas (LGAs) that have growth momentum include the municipalities of Stirling and Melville, which have 17 suburbs between them that are showing improved sales activity.

While Melbourne on the whole is now in negative territory, there has been some strong growth in several markets in the regional areas north of Melbourne, within commuting distance to the city. We are now seeing growth in the areas south of the city, such as Officer and Pakenham in Cardinia Shire, and even further south east in La Trobe Valley. The report also indicates increased sales activity and rising prices in some towns on the Bass Coast such as Wonthaggi, as well as Warragul and Drouin in the Baw Baw LGA.

It’s important to note that while increased sales activity can be an indicator of potential growth, it doesn’t provide a complete picture. Other statistics (including stock levels, time on market, vendor discounting, vacancy rates, rental yields, median prices, auction rates and seasonal fluctuations) should also be part of your analysis.

On the whole, however, Ryder may be right in urging buyers to look outside the square when determining where to invest. Fundamentals such as infrastructure expenditure, population growth, job opportunities and a strong local economy are often highly correlated to property market growth. He believes the biggest predictor of a good buy right now is a commutable distance from a major city.

There has been considerable discussion in the media about the results of this report. While they are indeed interesting, the predictions of growth are clearly not guaranteed. Many external – and sometimes unexpected – variables can negatively affect the property market in a particular area, such as overdevelopment, changes in the economy, government policies, poor local school options, changes in a certain industry – the list goes on. Investors should always do their own research and due diligence on the area where they plan to invest and be able to cope financially if the capital growth doesn’t eventuate.

Your Smartline Adviser will likely share your passion for property and can discuss not only your lending options and borrowing capacity, but also their property experiences in your local area.

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.