What suburbs should I be watching if I want to invest?

If ever a country was seeing a many-speed market, it’s Australia! Media reporting might have you believing we have been experiencing a nationwide boom, but while Sydney and Melbourne property owners have been enjoying a much-needed (and long-awaited) price surge, other cities such as Adelaide and Brisbane have been taking only tiny forward shuffles and Perth and Darwin have been suffering the pain of a post-resources-boom price recession with little sign of a bottom just yet.

Depending on which data you read, there’s an interesting story to the past 12 years that might surprise you. Sydney’s median house price was reported in 2005 as being $505,000 and in 2017 was sitting at $880,000, which is a 74% increase. Adelaide, on the other hand, showed a 2005 price of $278,000 and a July 2017 median of $585,000 – that’s a 110% increase! These figures show that while some cities sit flat for years and then boom for a while, others just enjoy year-on-year growth that adds up to be quite impressive.

Of course, median prices are greatly inaccurate as a measure of performance, as they depend on too many variables and can swing wildly from month to month. But a review of them over a period of years does show us that it’s less important to follow the crowd into overheated, frenzied markets, and far more important to seek out areas that show the potential for sustainable growth from the existence of measurable factors – such as population growth, improving wealth, infrastructure development and the diversity of employment opportunity.

If you stop and think about people who have made good profits from property investing, it’s always the ones who got into an area before anyone else really saw the potential. For most investors, though, their buying decision is very much influenced by the behaviour of those around them and what they read in the media. And by following the crowd in this way, the potential to make a good gain on property is at best going to be limited (since the property prices will already be inflated) and at worst non-existent, as the purchase was made too late into the boom and the price paid – in a market where the seller dictates how much they will accept – was likely to have been far too much.

And so the key to being a successful property investor lies not in just buying property with the potential to grow but buying that property before it even begins growing. It lies not in buying in blue-chip areas but in recognising a blue-chip area before it actually becomes one!

The potential to make a significant gain in Sydney is, for the foreseeable future, behind us. However, as many parts of Melbourne heat up, it’s easy to follow the population growth and

see where the gains will be made in the future. Melbourne is full of family areas where the buy-in price is low, the public amenity is in place, the schools are in demand and public transport is readily available for that work commute. This includes areas such as Werribee and Hoppers Crossing to the west and Dandenong South and Cranbourne to the east, an area where the population is the fastest growing in Australia.

The affordable middle ring of Adelaide, around Semaphore near the coast, and Modbury and Highbury to the north-east, is quietly heading into boom territory as demand picks up and the areas become more affluent.

And let’s not leave out Brisbane – with massive road infrastructure improvements, those affordable northern suburbs in the Moreton Bay Shire are absolutely an area that is set to provide lasting growth for years to come.