A savvy way to pick a potential property hotspot is to seek out the “ugly duckling” suburbs — according to one of Australia’s leading real estate experts.
Terry Ryder, director of Hotspotting, has named five city spots around Australia he considers to be underachievers with a promising future in his latest report, Top 5 Cheapies With Prospects.
These “ugly” LGAs all have five common ‘must haves’ — rising sales activity, potential for capital growth, plenty of houses at affordable prices, strong infrastructure and proximity to major job hubs.
“Ugly duckling is an odd term for something you would recommend to real estate investors, but the term is apt,” Mr Ryder said.
“The ugly duckling of the fairytale was considered unappealing because those around it didn’t understand what it was.
“Yet, it ultimately evolved into a graceful swan. There are
suburbs with similar qualities. They are places considered unattractive by those looking through uneducated eyes – but they have the potential to transform into real estate swans.”
Hotspotting’s report unearthed two affordable areas in Perth (Armadale and Gosnells) and in Adelaide (Salisbury and Playford), as well as one in
Brisbane (Ipswich), which have the most strategic buying opportunities for the first half of 2023.
For the “cheapies” list he focused on LGAs with median prices under $500,000, which left out any suburbs in greater Sydney or Melbourne.
Although not “cheapies” for the sake of the report, Mr Ryder told News Corp Australia that he would put his money on the LGAs of Melton for Victoria and Liverpool in NSW.
The more expensive cities have plenty of examples of yesterday’s ugly ducklings now trading as today’s very pricey swans, with Mr Ryder highlighting Richmond in Melbourne, Balmain or Surry Hills in Sydney, and Bulimba in Brisbane as prime past examples.
“There are suburbs, once considered primarily industrial in nature, which have changed through urban renewal into thriving residential areas with steady price growth,” Mr Ryder said.
“The significance of these areas in the residential market has grown because affordability has become a headline issue in the housing industry, which is one reason why the cheaper areas of our capital cities have recorded good capital growth over time.”
His advice to first-home buyers and investors on a tight budget is to target areas with
affordable prices and the five major ‘must haves’.
“Not all of the cheaper areas have the potential to evolve into real estate swans, but some of them do. The task for property investors is to identify areas that have reasons to out- perform,” he said.
City of Playford, South Australia Median house prices between $380,000 and $410,000 A family home in Elizabeth Downs in the City of Playford is currently listed with a price guide of $375,000 and $400,000. Picture: Supplied
Highlighted because it is the fastest-growing LGA in South Australia, Playford has multiple major job nodes, affordable houses and high yields.
It is also considered to be South Australia’s logistic and distribution capital, is home to the Edinburgh Defence complex and has significant investment such as $175m being sunk into the Playford Health Hub and $250m for Playford Alive Town.
Mr Ryder said the property market in Adelaide’s northern City of Playford LGA is experiencing rising momentum, fuelled by a revitalised economy and affordability that appeals to first-home buyers and investors on a budget.
“The region’s property market is further characterised by very low vacancy rates and rental yields, which are among the highest of the country’s major cities.”
City of Armadale, Western Australia Medians house prices between $300,000 and $380,000
As well as affordable housing, the Armadale LGA has strong population growth, large industrial areas with employment opportunities, a $4bn container port, $1bn hydrogen plant, $635m rail line, $237m upgrade to Armadale Rd and a $4.3bn shipbuilding project.
Mr Ryder said Perth is a nation-leading market, showing strong resistance to downturn pressures as it maintains high levels of sales activity.
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“It is the fourth fastest-growing local government area in Western
Australia and has some of the most affordable houses of any capital city,” Mr Ryder said.
Armadale has also been marked for future infrastructure development by the Federal government.
“The revival in this precinct is supported by some of the lowest vacancy rates – currently well below one per cent – in the Perth metropolitan area,” Mr Ryder said.
City of Salisbury, South Australia Median house prices between $370,000 and $620,000 A three-bedroom Adelaide home in Salisbury North on 640sq m is listed with price expectations between $399,000 and $434,5000. Picture: Supplied
The City of Salisbury has defied the negative impacts of Covid through a construction boom made up of medium-scale projects, now generating thousands of jobs.
Mr Ryder’s examples include; defence projects worth more than $4bn, the $1.9bn Edinburgh Parks Precinct, a $885m transport corridor, the Gawler train line electrification, $250m spent on the GMH site redevelopment and a $240m health hub.
“All this activity has buoyed the
property market and is seeing rents rise along with strong yields and extremely low vacancy rates.
Along with affordable house prices, this attractive combination is providing opportunities for entry-level investors,” he said.
City of Gosnells, Western Australia
Alongside Gosnells’ affordability, Mr Ryder said it has strong population growth, large industrial areas for ongoing employment, a $4bn container port, $1bn hydrogen plant, $2.5bn worth of road upgrades and a $4.3bn shipbuilding project.
“Gosnells has some of the most affordable houses of any capital city. Strategically located on Perth’s southeast transport corridor, and on the Armadale train line, it is easily accessible to the Perth CBD and the Kwinana and Rockingham employment nodes.”
City of Ipswich, Queensland This East Ipswich house n suburban Brisbane has a $389,000 price tag. Picture: Supplied
Ipswich City attracts steady buyer demand and was boosted in 2020 and 2021 by first-home buyers receiving government assistance.
“For some years it has been one of the fastest-growing regions in southeast
Queensland and it has become one of the top two SEQ regions for jobs growth,” Mr Ryder said.
The area also benefits from the RAAF Base Amberley expansion, a proposed $1.7bn fast rail link, $5bn ADF contract, $12bn pumped into the Springfield community, a $1.5bn Springfield rail link, $1bn Citiswich project and the $2.8bn motorway upgrade.
“Other core elements of Ipswich’s appeal are accessibility, affordability, and infrastructure,” Mr Ryder said.
City of Melton, Victoria
Although the Melton LGA didn’t make the cut for the “cheapie” report due to its house price median above $500,000, Mr Ryder said the location is the least expensive in Melbourne.
“There just aren’t any suburbs in Melbourne with medians in the $300,000 to $400,000 bracket. So suburbs around Melton are attracting strong demand because they offer affordability, have good infrastructure, transport links — really everything that people in a certain price range need,” he said.
“It’s got major shopping, schools, relatively affordable housing by Melbourne standards, and it’s easy enough to travel into central Melbourne for people who need to go there.”
City of Liverpool
Given that Sydney is by far the most expensive city in the country, Mr Ryder said house markets are rarely affordable for those with tight budgets.
“I’d be suggesting anyone looking at cheapies with prospects look at Liverpool, but more in terms of apartments,” he explained.
“In Liverpool really is a suburban CBD with a university campus, hospital, big retail spaces, and transport links. Whichever direction you hit you can buy apartments at reasonably affordable prices.”
A centre that continues to evolve, Mr Ryder added that Liverpool was one to watch in Sydney because of upcoming infrastructure such as the new Sydney airport.
“It’s a really good nerve centre in that part of Sydney. And if you need to go to the Sydney CBD, you can jump on a train and get there quite quickly.
There’s also strong
rental demand and it’s only going to become more desirable as the Aerotropolis is built. Airports always bring with them thriving industrial zones, and that means lots of jobs.”