Hot spots: the top suburbs to watch in 2017
Thinking about investing in property in 2017 but not sure where to invest? Money asked three experts - Chris Gray, Jeremy Shephard and Margaret Lomas - for their picks for the new year. A number of states are covered and as well as suburbs in capital cities, and there are a few regional locations to choose from. Here's what our experts had to say.
Rather than try and pick the latest hot spot, which may or may not off, I prefer to go for more of a reliable return from an existing blue chip inner city suburb. Even the experts don't profess do be able to pin point the highs and lows of the property or stockmarket with any great accuracy and so why take the risk? The blue chip suburbs are not going to double overnight but they're also not going to halve or remain stagnant for a decade. No matter what happens with the economy, if there's virtually no supply due to height constraints and massive demand, prices are high likely to continue to grow. Slow and steady wins the race.
With impressive views of Sydney Harbour this iconic suburb consistently attracts a high interest, appealing to affluent city workers who can wander across the bridge to work. Despite a number of high rises and limited parking in the area, once you have found a unit that ticks all the boxes, it should always be in demand.
Presenting an enviable blend of harbour, tranquillity and easy access to the city, cafes and shops, Cremorne is another great suburb to invest in. With a reasonable number of unit blocks, the area attracts a high demand of upper income professionals in the north who are interested in a quieter lifestyle.
Popular with young, affluent Australians and overseas residents who will pay a premium price to live near the beach, Bondi is a classic suburb with massive demand. Property in the area can seem to have an expensive price tag, but is worth the investment for the locals, delivering good long term growth.
Coogee offers a quieter alternative to Bondi, appealing to a slightly different demographic of inner city worker, overseas traveller and beach lover who enjoys a village lifestyle. With a coveted eastern suburbs post code, provided you invest in the right property, this area can deliver a steady rental return and capital growth.
Offering an inner-west lifestyle with easy access to the city and Harbour ferries, Balmain is a good investment area for those who want something different to Sydney's north and eastern suburbs. Filled to the brim with pubs and cafes, and with a mix of modern and period properties, this area has something for everyone.
Chris Gray is CEO of Your Empire, a buyer's agency which builds property portfolios for time-poor people - searching, negotiating, renovating and managing property on their behalf. Chris hosts Your Property Empire on Sky News Business.
High demand relative to supply as indicated by a DSR+ of 67 out of 100. The DSR+ is a score out of 100 for the capital growth potential of a property market. Standout indicators include: fast selling times; high auction clearance rate; good overall Walkscore for the suburb; houses are good value relative to units; and most neighbouring suburbs also have a high DSR+.
High demand to supply ratio with a DSR+ of 68 out of 100. In particular: sellers don't have to come down much, if at all, to get a sale; low proportion of renters to owner occupiers; yields of 5% are possible; very little stock on market; good number of people searching online compared to properties available; high proportion of properties being sold via auction vs. private treaty; and most neighbouring suburbs also have a high DSR+.
High demand to supply (DSR+ 65). 15 out of the 17 DSR+ indicators are pointing in the right direction, especially vacancy rates; interest from online searchers; percentage of sales by auction; and percentage of listings with open inspections.
High demand relative to supply (DSR+ 67). The standout indicators were low vacancy rate of 0.55%; high yield above 5%; low stock on market around 0.5%; decent ripple effect potential for growth from neighbouring suburbs to flow into this suburb; both sales growth and rental growth over the past 12 months are in double digits.
High demand to supply ratio (DSR+ 65). The vacancy rate suggests a chronic undersupply of rental accommodation at 0.3%. It's the same story with properties for sale - chronic undersupply. There are more than 30 people looking online per property available for sale. Almost half of all properties for sale are up for auction. Rents have growth 9% in the past year.
Very high demand relative to supply with a DSR+ of 70 out of 100. The average number of days a unit spends on market is less than 30. Stock on market is surprisingly low indicating a chronic shortage. There are more than 150 online searchers for every property for sale. There is potential for growth from neighbouring suburbs to flow over. Rents have risen nearly 15% over the past 12 months.
High demand to supply (DSR+ 67). Discounting from original asking prices is less than 2% which means many sellers are getting offers above their asking price. Auction clearance rates are above 80%. Decent potential for recent growth in neighbouring suburbs to flow into Adamstown.
High demand to supply (DSR+ 67). Vacancies sit at less than 0.5% which is exceptionally low. Yields over 5% are possible. The historical growth profile over the past 10 years strongly suggests this market is entering its next growth phase. A high percentage of properties listed for sale are being sold via auction.
Wingham (Greater Taree)
High demand to supply (DSR+ 67). Vacancy rates are below 1% and yields above 6% are possible. Prior 10-year growth suggests the start of the next growth surge. Neighbouring suburbs have experienced 8% extra growth than Wingham which could ripple over. Neighbouring suburbs have high DSR+ scores too.
High demand to supply ratio (DSR+ 65). Neighbouring suburbs have a high DSR+ too, averaging about 64. Vacancy rates are below 1%. Yields are approaching 5%. Over the past 12 months there has been an increase in rents by over 8%.
Arana Hills (Moreton Bay)
High demand to supply ratio (DSR+ 65). Sellers don't have to drop their asking price by even 2% to get most sales across the line. Yields are at 4.6%. Auction clearance rates are over 70%. The overall Walkscore for the suburb is 75 which is quite convenient.
High demand to supply ratio (DSR+ 64). Properties are getting snapped up quickly, coming off the market within 42 days. Yields are pushing up to 4.8%. There is very little stock on market for eager buyers to squabble over. 14 out of the 17 DSR+ indicators are pointing in the right direction.
The Gap (Brisbane)
High demand to supply ratio (DSR+ 63). The proportion of renters to owner-occupiers is about half the average country-wide. There is a significant undersupply of houses in this market. There are nearly 100 people searching online per property listed for sale. Rents have grown by nearly 10% over the past year.
Ferny Hills (Moreton Bay)
High demand to supply ratio (DSR+ 62). Average days on market is quite low at 46. Discounting is less than 2%. The proportion of renters to owner-occupiers is very low at only 14%. Vacancy rates are also very low at less than 1% which has led to yields around 4.75%. Stock on market is also very low yet plenty of people are searching online for property.
Tugun (Gold Coast)
High demand to supply ratio (DSR+ 65). The area around Tugun is pretty hot too with an average DSR+ of neighbouring suburbs at 64. The vacancy rate is ridiculous at 0.2%. There are over 100 searchers online for every property available for sale.
High demand to supply ratio (DSR+ 64). The stock on market is very low for houses in Adelaide yet for each one there are more than 200 would-be buyers searching online. The average Walkscore is 96 which is excellent.
Semaphore (Charles Sturt)
High demand to supply ratio (DSR+ 64). The auction clearance rate is 77%. Vacancies are under 1% and yields are pushing 5%. Both sales and rents have risen by nearly 20% over the past 12 months.
High demand to supply ratio (DSR+ 65). Days on market is 63. Discounting is ever so tight at only 1.4% so plenty of vendors must be getting above their asking price. A vacancy rate of 0.8% and a less than 1% stock on market reflect how tight accommodation is.
Findon (Charles Sturt)
High demand to supply ratio (DSR+ 62). Sellers only have to come down by about 2% of their original asking price to entice a buyer to sign. Historical growth is suggesting that this market has not had a significant period of growth.
High demand to supply ratio (DSR+ 61). 13 of the 17 indicators used in the DSR+ are all pointing in a positive direction which confirms the potential of this market. Auction clearance rates are above 70%. Neighbouring markets have had 5% more growth recently than Findon which could ripple over.
High demand to supply (DSR+ 65). Vacancy rates are less than 0.5%. Yields above 6% are possible. Stock on market is chronically low. There are around 150 people searching online per property. Prior growth indicates this may be the start of the next growth surge in prices.
High demand to supply (DSR+ 64). Yields above 5% are not uncommon. Rents have grown from last year by nearly 7%. The average neighbouring suburb has a DSR+ of 62 making it difficult to find a similar suburb where buyers aren't fighting over each other.
High demand to supply (DSR+ 64). Properties are snapped up quickly with a "days on market" average of 42. Typically, vendors are dropping their asking price by only 1.4% which means in many cases offers are made above the asking price. Only 17% of residents are renters. And the vacancy rate is a tight 0.42%. As a result, yields are over 5%.
Lenah Valley (Hobart)
High demand to supply (DSR+ 62). 13 of the 17 indicators to gauge supply and demand were heading in the right direction. Days on market was 50. About 160 people are searching for property online for every single property available. That's a lot of people, but not enough properties.
High demand to supply (DSR+ 63). Discounting from the original asking price is only just above 2%. That means some sellers are receiving offers above their asking price. The auction clearance rate is a very healthy 75%. A large number of would-be buyers are searching online for a small number of properties available.
Very high demand to supply ratio (DSR+ 64). Properties only spend about 45 days on market before selling. The auction clearance rate is above 77%. Less than 20% of residents are tenants. There are more than 100 online searchers for every property for sale. Rents have grown by over 20% for the past year.
Very high demand to supply ratio (DSR+ 64). Most of the neighbouring markets have a DSR+ of 63 which shows the area as a whole is in a state of demand exceeding supply. Houses are selling in less than a month on average. Almost half of all properties selling are going for more than the vendor's asking price.
Belmont (Greater Geelong)
High demand to supply (DSR+ 67). Yields are above 4.5%. More than half of all properties listed for sale are to be sold at auction which reflects strong demand from buyers that agents want to play on. Rent has grown by 6.5% over the past 12 months and this suburb has a good Walkscore.
High demand to supply (DSR+ 61). Properties are spending only 30 days on the market. The auction clearance rate is an impressive 91%. Only 17% of residents are tenants. Nearly 60% of all properties are sold via auction which reflects good heat in the market.
Ringwood North (Maroondah)
High demand to supply (DSR+ 63). Properties often sell for more than the original asking price as discounting is less than 1%. Auction clearance rates are over 76%. The proportion of renters is a touch over 11% which is very low. There are over 100 people searching per property available.
DSR Data founder Jeremy Shephard is a self-confessed property data "nutjob". The DSR+ is a score out of 100 for the capital growth potential of a property market. The DSR+ combines 17 indicators like auction clearance rates, vacancy rates, ripple effect potential, market cycle timing, stock on market, vacancy rates, etc. View the complete list here: dsrdata.com.au/stats/stats
The ACT still holds the second lowest unemployment rate in the country, which is no surprise given the surfeit of government position and the fact that a portion of the population is there for their public service position.
However the population growth is generally low and the buy in price generally high and we don't see the demand pressures that we see in other areas. Modest population growth has eased pressure in the Canberra property investment market.
Overall I don't recommend an investment in Canberra right now and I would particular be careful of the apartment market which runs the risk of oversupplying a property type which has the least demand. If you must buy there:
This is a highly affordable market which still lacks popularity amongst locals but is showing the first signs of emerging into a more desirable suburb. This is probably the suburb most likely to return both growth and a mortgage cover rental yield to the investor. Its buy price is significantly lower than bordering suburbs and I feel the gap is likely to close in the coming years.
Dunlop should hold its value but not necessarily gain a lot of traction. It is presently quite a high demand suburb which should keep a floor under prices. This area has been gaining popularity as the demographics undergo a change from first home buyers and renters and has become a more favoured suburb in Belconnen.
With a median Price of about $530k, this is getting up there from an investor point of view but as a family rich suburb it should hold its value. With rental yields around 5% there's a good cash flow right now. Kambah provides an abundance of services for the family demographic including a large number of schools, sporting fields and other community services.
Conder in the south has emerged from a previously low income area into one of families and second home buyers. With housing starting from the high $300s and averaging $500,000 the almost 5% rental yield makes this suburb one which is a good choice for investors.
Bordering the nearby and highly popular Paterson Lakes, Carrum Downs has previously not been a favoured suburb, having a fairly low socio economic profile. However the buy in price is almost half that of the coastal suburbs which it borders, and with the opportunity to buy larger block sizes which may later be developed or have a unit added behind the existing house, the 4.5% yields make this an attractive choice.
With a higher buy in price of $550,000 yet a still strong rental yield of around 4.5%, Monash is right in the middle of significant development, most notably the Monash employment cluster. Located 20 km south east of the Melbourne CBD this project will deliver the largest concentration of employment outside the CBD, delivering jobs to the south east and significantly impacting property process all the way to the peninsula.
With a median price of just $380,000 and a rental yield of over 4.5%, this area has a strong family demographic supported by significant service provision such as sporting facilities, a train line into Melbourne and over 20 public and private schools in the surrounding areas. As this area emerges from its past, where it has been less popular amongst Melbournite's, we should see significant capital growth.
With a focus on middle aged families and couples, this area is an easy commute to the CBD of Melbourne from the west and a stone's throw from the airport - attracting management level workers with the need to travel for work. Not far from the coastal shores of Altona the buy price is around $400,000 with rental yields just under 5%. I see this as more of a slow burn due to the availability of land but for the investor the good rental yields will make the wait worthwhile.
Thought of as almost a country town, Sunbury exists just 10 minutes from Tullamarine airport and has a dominance of the family demographic looking for larger blocks, affordable housing yet city fringe convenience. I see this area slowly growing over many years. Median price of $390,000 with a rental yield of 4.5% this suburb will definitely grow in popularity. Investor tip: Don't buy new or off-the-plan - look for existing houses around five to seven years old as these will be significantly cheaper.
I've liked this for a while with not many people are taking up the suggestion. 20 minutes north of Brisbane airport and 40 minutes easy commute form the city, the new rail line into Rothwell has added to its convenience. This is a coastal suburb with houses available from around $300,000 with a greater than 5% rental yield. The entire Northern suburbs is booming and with good reason. I see this as a second Redcliffe - an area which grew beyond expectations due to the holiday lifestyle it offers, yet still within a city.
Close to major arterials like the Centenary Highway and the Logan Motorway, it still has the relaxed outer suburb feel and is well serviced for families. The new rail line reduced public transport commuting to just 40 minutes - and there are school and shopping centres. Buy in from just over $400,000 with rental yields about 4.8%. I suggest buying an existing house rather than a new development as this area is still finding its market value with some developments significantly overpriced.
Upper Mount Gravatt
This is presently a high demand market which has pushed up prices, but if you can find a bargain, I'd snap it up. Rental yields are a little low at around 4% and buy in process a little higher at $600,000 however this area is like a gateway to the southern suburbs with Logan Road and the Pacific Motorway running right through it. Described as a mini Central Business District with a large Westfield this area doesn't have a lot of space for further development which should bring a pressure to prices in the coming few years.
This is a suburb which has been a little overlooked as Chermside, Sandgate and gateway gain traction. A buy in price of around $400,000 with a median rent of close to 5% this is an extremely high demand market with a little over twice the amount of people now looking to buy there. Its proximity to the city, sitting just on the fringe of the middle ring and opportunity to buy a larger block with possible future development makes this suburb a great buy but a closing window of opportunity.
Just 19 km to the CBD and bordering the massive Indooroopilly commercial and residential development area which has done exceptionally well despite expectations to the contrary, Forest Lake offers a family lifestyle and affordable housing. This is a planned community with buy in prices around the high $300k and rental yields around 5%. As with all of these newer suburbs, my advice is to go for something established and on the secondary market rather than opting for the new release developer stock.
My recommendation is not to buy in Sydney. I firmly believe that there is little to gain in the way of value in Sydney and with rental yields painfully low it's a long wait with a negative cash flow to see growth in this market again. So a buy here is a significant opportunity cost of a buy in a better area (for investment).
Situated not too far from the Badgerys Creek proposed airport development, this area is presently still considered quite low socio economic but should be the recipient of some growth in the coming years. Campbelltown didn't get a lot of the Sydney growth and this area still has a low buy in price of $500k and a rental yield of about 4%, this is a family area and should grow mainly because it is one of the few remaining affordable suburbs in Sydney.
While technically not Sydney Gosford has become part of outer Sydney with the 1.5 hour train commute being equal to that of areas like Penrith and Campbelltown. Gosford is in revival mode with a promise to reinvigorate the town centre and with virtually no new land available there is a high demand (twice the NSW average) for this market right now. I suggest a unit as this area is now attracting young professionals who commute to Sydney for work rather than families.
Again this is Central Coast suburb but one which has been undervalued for a long time. Situated one suburb back from the coast and serviced by schools and a major shopping precinct buy in prices remain below $500,000 and rental yields can be as high as 5.5%. The areas is becoming very popular for townhouses as these are affordable and satisfy this young demographic.
A suburb of Wollongong but highly commutable by road or rail back into Sydney this area is becoming quite favoured. North of Wollongong with a great family demographic the buy in price is getting upwards of $700k with a rental yield of around 3.5%. I personally would not buy an investment with those credentials however there should be some room for growth in this market.
Margaret Lomas is founder and director of Destiny Financial Solutions, and host of Your Money Your Call and Property Success with Margaret Lomas on Sky News Business. She is the best-selling author of How to Achieve Property Success and 20 Must Ask Questions for Every Property Investor.
|Suburb||State||Median price||Rental yield||Growth (1 yr)*||Expert|
|Bateau Bay||NSW||$575,000||4.10%||9.52%||Margaret Lomas|
|Bondi Beach||NSW||$2,400,000||2.40%||18.39%||Chris Gray|
|Coogee Beach||NSW||$2,500,000||1.90%||11.60%||Chris Gray|
|East Gosford||NSW||$610,000||4.10%||8.81%||Margaret Lomas|
|Fairy Meadow||NSW||$680,000||3.80%||18.67%||Margaret Lomas|
|Kirribilli (units)||NSW||$1,200,000||2.90%||33.97%||Chris Gray|
|Paddington (units)||NSW||$720,000||3.80%||-5.64%||Jeremy Shephard|
|Arana Hills||QLD||$513,000||4.50%||5.77%||Jeremy Shephard|
|Bald Hills||QLD||$414,000||4.90%||7.47%||Margaret Lomas|
|Deception Bay||QLD||$336,000||5%||5.49%||Margaret Lomas|
|Ferny Hills||QLD||$515,000||4.50%||7.29%||Jeremy Shephard|
|Forest Lake||QLD||$428,000||4.70%||7.27%||Margaret Lomas|
|Springfield Lakes||QLD||$420,000||5%||1.08%||Margaret Lomas|
|The Gap||QLD||$627,000||4.20%||2.62%||Jeremy Shephard|
|Upper Mount Gravatt||QLD||$590,000||3.50%||5.36%||Margaret Lomas|
|Semaphore Park||SA||$505,000||4.10%||2.96%||Jeremy Shephard|
|Lenah Valley||TAS||$425,000||4.60%||4.94%||Jeremy Shephard|
|Carrum Downs||VIC||$390,000||4.70%||9.87%||Margaret Lomas|
|Frankston North||VIC||$310,000||4.90%||10.71%||Jeremy Shephard|
|Noble Park||VIC||$550,000||3.30%||19.18%||Margaret Lomas|
|Ringwood North||VIC||$790,000||2.90%||8.22%||Jeremy Shephard|
|* Data period: August 2015 - August 2016|
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