How to spot a growth suburb and boost your real estate returns

How to spot a growth suburb and boost your real estate returns

Whether you’re buying a dedicated investment property or a family home, capital growth matters. No one wants to lose money on a property. So regardless of whether you’re planning on selling the property or living in it forever, you want to make sure you’re maximising your returns.

One way to do this is by buying in a ‘growth’ suburb.

What is a growth suburb?

A ‘growth suburb’ or ‘capital growth suburb’ typically refers to an area that is currently undervalued or undercapitalised. In other words, it’s one that is poised for growth. Because of this, it offers buyers a unique opportunity to buy property at comparatively low prices, with the expectation that the value of the property will appreciate over time. And, in some cases, drastically appreciate over a short time.

While Australia’s real estate landscape has historically grown, specific regions and suburbs skyrocket faster. Recognising these gives you the opportunity to grab those higher capital returns.

Deep diving into data

To take advantage of the opportunities that investing in a growth suburb can bring, you have to be able to recognise it. And the first step to doing that is deep diving into the data.

As an investor keen on discovering the next growth suburb, your primary weapon is data. The Australian real estate landscape is rich with resources that can offer insights into suburb potential. And tapping into these resources is the initial step any savvy investor should take.

Some publicly accessible platforms that you might use are the Australian Bureau of Statistics, and Residex. They can provide you with invaluable information that can guide your investment and property purchasing decisions, from historical property values and availability of properties in specific areas to the ‘days on the market’.

So what information should you look for?

Signs of a growth suburb

  • Days on market: This metric offers a glimpse into the demand in a particular suburb. A shorter time typically indicates higher demand. So, if something is trending upwards, but the price still remains relatively low, it might be a good time to buy up.
  • Industrial changes: Changes in the mix of local industries can influence property values. For instance, if a new tech hub is being built it might bring in a younger, high-earning demographic.
  • Amenities: The proximity to quality schools, healthcare facilities, shops and even recreational areas can significantly impact a suburb's appeal.
  • Business development: If more businesses are starting to develop in an area, particularly cafes, boutiques and other ‘lifestyle’ shops, this might be a signal that a suburb on the rise.
  • Transportation: Efficient transport links make a suburb more accessible and desirable. And this boosts its growth potential.
  • Demographics: Understanding the age, income levels and other demographic details of the residents can help you understand the suburb's future.
  • Planned developments: Future developments can significantly influence property values. This could be a new train or light rail station, additional housing or new schools and childcare facilities.
  • Gentrification: Sometimes a suburb will begin attracting a more affluent demographic. You might see homeowners putting more money into home renovations and upgrades. At the same time there will be an influx of services, businesses, restaurants, cafes and more. These all signal a shift in the area’s appeal and indicate more growth potential.
  • Property supply and demand: Supply and demand applies in real estate, too. Areas that have a limited property supply but high buyer interest generally command higher prices. Finding out property counts, median prices and level of buyer interest in various suburbs can help you see if a suburb is actually a growth suburb.
  • Vacancy rates: One great way to find a growth suburb is to look at rental vacancy rates. A rate below 2% suggests high rental demand. And this will be an excellent clue that the suburb is highly appealing to residents.
  • Bridesmaid suburbs: If you’ve found a suburb that you like, but you’re already priced out of, take a look at the neighbouring areas. These are known as ‘bridesmaid suburbs’ and often they offer a similar lifestyle but haven’t yet hit their growth peak.
Growth Suburb and Boost Real Estate Returns
Evaluating market trends, amenities, demographics, and future plans in a suburb, including 'bridesmaid' areas, can uncover valuable real estate investment opportunities.

Harnessing your property’s capital growth through expert home loan funding

Finding a growth suburb is just one step in harnessing your property’s potential capital growth. You also need to focus on getting a great home loan. You certainly don’t want to overcapitalise! When you can align the right property with the right financing you’ll be in the best position to capitalise on growth suburbs and enjoy substantial capital returns.

Get expert help with Lending Loop

Our Lending Loop team is your expert capital growth partners. We can help you find the right home loan and lender, and get you the best deal. You’ll be able to fund your property and be confident that you’re doing so with excellent results.

Our Lending Loop team is always here to help with all your home loan needs and to answer any question you may have. We work with over 40 of Australia’s biggest lending institutions and are ready to help you find the best loan for you. Give us a call today at Lending Loop.

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