Log in / Sign up

Get in touch with one of our experts who can answer all your home loan related questions.

We love feedback!

Back to Inspire Home

How to spot a suburb that’s ready to boom

Get a free property report in seconds

Search an address for price estimates and sales history.

Search a property

Investing in property is a goal many buyers look to achieve, but with so many suburbs to choose from, which one is the right investment? We outline what factors indicate rising property value so you can spot booming suburbs.

Calculate your loan repayments

$
%
years

1. Current infrastructure

When choosing what suburb is best for your investment, it’s a good idea to analyse the local surroundings. Generally, suburbs that have access to public transport are likely to be subjected to higher property prices than surrounding suburbs. Additionally, suburbs that have good schools are likely to appreciate in value as buyers are always looking to purchase or rent property near educational facilities.

Facilities such as shopping outlets and medical centres can also be good indicators of a growing suburb.

Wondering how much you could borrow?

Calculate your borrowing power based on your income.

Calculate now

2. Future development plans

While existing infrastructure can help you differentiate between surrounding suburbs, future plans can give you a clearer picture of whether a suburb is likely to appreciate. Future plans such as new transport methods, new schools, medical facilities and nightlife facilities usually indicate that this may be an attractive place to live and buyers will look to populate the area.

It is smart to note that while a suburb may not have a variety of existing facilities, future plans can help boost the market. With that being said, some future plans such as a new prison for example can ultimately harm property value, so be sure weigh up the benefits and drawbacks of future infrastructure.

Suburbs that are beginning to experience gentrification are typically bound to face higher property value in the future. The introduction of new cafes, shops, updated landscaping and buildings can be appealing to buyers and renters, ultimately driving the property value up.

Future plans can usually be obtained by contacting the local council. Looking over these plans early can help you decide what suburb will likely experience the most growth and help get you in early.

cafe-in-sydney

3. High auction clearance rates

Some of the best indicators of whether a suburb is growing are recent sales statistics. Recent outcomes can indicate whether there has been an upward trend in the market.

A good place to start with statistics are recent auction outcomes. Suburbs that experience a jump in auction clearance rates are more likely to be subjected to rates of growth. This is because higher auction clearance rates mean that there is a demand for property in this area and more competition when bidding at auction.

A higher demand for properties in a suburb will drive property prices up so identifying these trends early can help you make a healthy investment.

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates

4. Growth in rental yield

While some buyers look for a long-term, forever home in suburbs that might appreciate in twenty or so years, investors look for ways to generate a new source of income through high rental yield by leasing their property.

Rental yield refers to the returns made on an investment property and can help investors determine whether a suburb is appreciating. Rental yield is measured by the following formula:

Gross rental yield = Annual rental income (weekly rental income x 52) / property value x 100

Keep in mind that this formula does not account for expenses related to investment properties.

Suburbs that are gradually increasing in rental yield indicate that the properties within the area are generating larger returns than surrounding properties. For investors that are looking to dive into the property market, investing in areas that have a higher rental yield could prove to be a wise investment.

5. Low vacancy rates

A vacancy rate refers to the portion of available rental properties in an area. A high vacancy rate means that there is a larger number of available rental properties, whereas a low vacancy rate means there is a limited supply.

Suburbs with a low vacancy rate are a typically better investment since it indicates the demand for property in the area outweighs supply. A low vacancy rate means landlords are likely to charge higher rent and usually helps increase the average property value in the suburb.

6. Time on the market

A good way to gauge whether a suburb is outperforming surrounding areas is by watching its performance on the market. Generally, properties in a booming suburb spend a shorter time on the market compared to properties in neutral or depreciating suburbs.

Properties generally spend a shorter time on the market when there is a higher demand to live in those areas. Suburbs that have several of these properties could indicate that there will be a boom in the near future.

However, keep in mind that properties that spend a short time on the market may be in suburbs that have already peaked. When researching the market, it is a good idea to look at suburbs that are gradually progressing rather than remaining stagnant. Investing in a stagnant suburb could mean that you face the downward trend of the properties.

Where are the safest suburbs in Australia?

Find out if your suburb lands on our list.

Read now

7. The ripple effect

Booming suburbs can sometimes create opportunities for surrounding suburbs as more buyers look to settle down. As vacancies begin to fall and prices begin to rise, some buyers may look to purchase property in the surrounding or nearby suburbs, pushing up prices in that area.

If you missed your chance to invest in a suburb while it was rising, surrounding suburbs may offer a chance to benefit from the boom.

Could you use equity to buy another property?

How much equity can you access?

$

Don't know your property value?
Get a free property report

$

Got a home loan question? Just ask!

We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a Home Loan Specialist here.

The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Got your eye on a property down the street?

Find out how much it's worth with our free property report.

Search a property

Tags: investment property, gross rental yield, investment, investment loan, investment return, home equity, capital growth, new purchase, first home buyer

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates
How much is your home worth?

How much is your home worth?

Get a free online property valuation with local sale and suburb statistics.

Get your property report

Important legal stuff

COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
Lendi is the trading name of Lendi Pty Ltd, a related body corporate of your licensed credit assistance provider, Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence Number 442372). We will never sell your email address to any third party or send you nasty spam, promise.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
Made with love at Circular Quay in Sydney, Australia. © 2019. All rights reserved.