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PROPERTY lecturer and author Peter Koulizos answers your real estate questions.
Q. What are the suburbs for home buyers to watch in 2013?
A. If one of your New Year’s resolutions is to buy a house to live in or an investment property, start looking at “ugly duckling” suburbs.
An ugly duckling suburb is undervalued and is relatively cheap now but has the potential to turn into a real estate swan as it grows at a faster rate than the majority of other suburbs. It may be currently cheap due to the low level of housing quality in the area, high concentration of industry or they might be in the vicinity of undesirable features such as a quarry, sewerage works, etc. However, the suburb has the likelihood of increasing markedly in value due to gentrification of the area, and because public and private money is being spent in the suburb.
My top five ugly duckling are:
Thebarton (SA)
Woolloongabba (Qld)
Marrickville (NSW)
Rockingham (WA)
Footscray (Vic)
Thebarton
Thebarton is only 1km from the Adelaide CBD. It is has many character homes which were built a century ago. There are also some light industrial pockets. It is a typical inner city working class suburb that is undergoing gentrification. Thebarton has a warm cosmopolitan feel about it with many nationalities residing in the suburb. It is typical in nature to Footscray in Melbourne and Marrickville in Sydney.
Why you should buy here
Thebarton is within walking distance to the city.
Being close to the city, it is appealing to young white collar workers who can afford to pay relatively high rents.
As it is in the western suburbs, it is situated between the city and the sea.
The southern section is adjacent the prime suburb of Mile End.
With three university campuses all within 2km of Thebarton, there are great opportunities for investors to offer rental property as student accommodation. Thebarton is favoured by international students due to its cosmopolitan feel.
There are good opportunities for redevelopment. In some areas, you are able to build new dwellings on only 270 square metres of land.
It is relatively easy to “value add” through renovation as many of the properties are character/period homes. Examples of renovated homes are dotted throughout the suburb and increasing in number.
Woolloongabba
Woolloongabba is only 2km from the Brisbane CBD, on the south side of the Brisbane River. It is a typical inner-city suburb with pockets of commercial and light industrial premises, mixed with lovely character residential properties, which is evidence of its working class origins.
Why you should buy here
Close to the city.
Close to the Brisbane River.
Close to the entertainment, recreational and dining precinct known as South Bank.
Adjacent the prime suburbs of Highgate Hill, South Brisbane, Kangaroo Point and East Brisbane.
With the many character homes in Woolloongabba that require upgrading, it provides the investor with opportunities to make a quick profit through renovating. Ideally, the astute investor would hold onto the upgraded property to enjoy the potential capital growth.
The many hospitals and medical centres in the vicinity provide a large pool of prospective tenants for investors. The medical and para-medical workers employed at these medical facilities are looking for accommodation close to work.
Marrickville
Marrickville is 7km from the Sydney CBD. It is a typical working-class inner-city suburb. The streets are lined with many period homes that have on-street parking. The housing is generally small cottages, often detached. There are also many red brick Federation style homes and some fibro properties dotted throughout the suburb. It is a very multicultural suburb, with many people of Vietnamese and Greek heritage living in the area. Marrickville is known for its Vietnamese restaurants and cuisine. It is obvious that gentrification is slowly occurring in Marrickville, highlighted by the beautification of Marrickville Rd and the many cafes and shops that line this strip.
Why you should buy here
Affordable suburb, close to the city.
Adjacent the prime suburb of Stanmore.
There are many renovation opportunities due to the number of character homes and their original condition.
Rockingham
Rockingham is 42k from the Perth CBD, and on the coast. For many years, Rockingham was a sleepy village. With the establishment of major industry in nearby Kwinana and the development of the naval facility on Garden Island, Rockingham slowly transformed from a holiday destination to a place to live and work. With its proximity to the sea, employment and improved transport infrastructure, Rockingham is becoming popular.
Why you should buy here
Cheap location close to the beach with easy access to Perth, via the train.
Some properties in the area have sold for well over $1 million. This will help increase the price of many other properties in this location.
There are many pockets of land zoned R40, which provides great opportunities for subdivision.
Good rental prospects with Murdoch University, Challenger TAFE and the hospital nearby.
Continued spending of money by both the private and public sector.
Footscray
Footscray is 6km from the Melbourne CBD. The homes are typical of an inner industrial suburb. They are of a cheaper construction. It has been popular with migrants since the 1950s and thus has a cosmopolitan feel about it. There is a huge variety of shopping in Footscray, reflecting the diverse background of its residents. There are also two campuses of Victoria University (VU) in Footscray.
Why you should buy here
Close to the city.
Adjacent Seddon, which is well underway with its gentrification.
With two campuses of Victoria University in this suburb, Footscray is very popular with students, especially international students. Students from overseas prefer to live in a cosmopolitan area; Footscray is certainly that. With an abundance of students in this location there are many opportunities. Investors are able to rent out on a per room basis and owner occupiers are able to earn some extra income through home stay programs or renting out a spare room and collecting board.
Footscray has been targeted by both state and federal governments as an area where money will be spent to improve and extend facilities.
My pick of suburbs with a median unit/house price below $500,000 are:
Brisbane
Woody Point
Sydney
Marrickville
Melbourne
Footscray
Adelaide
Torrensville
Perth
Carlisle
Darwin
Millner
Canberra
Braddon
Hobart
Glebe
How to pick an undervalued suburb:
Some of the other signs to look for and questions to ask yourself include:
People – Are there many new shops with lots of young children around and well-dressed parents pushing prams?
Cars – Vehicles are a reflection of the people that live in the area. Are there lots of small black BMWs and Audis? This could be an indication of an upwardly mobile demographic with money to spend.
Retail – The buildings might look cheap and run down but the shops within them are not selling cheap produce. Are the cafes, restaurants and clothes shops within these buildings selling goods at a premium price?
Main street – When going down the main street, focus on the number of “For Lease” signs and empty shops. If there are not many “For Lease” signs, this is one sign that the local economy is doing well and people in the area have money and is willing to spend it.
You can also do research at home to verify whether this suburb will always remain an “ugly duckling” or is it undergoing transformation. Check out the data on the Australian Bureau of Statistics (ABS) website for the following information:
Occupation – The number of people in professional positions should be increasing. The higher the income, the more people can spend on buying or renting property.
Median income – The pace of growth of incomes in the suburb should be greater than that of the state/nation. This indicates a wealthier demographic moving into the area.
Education – The percentage of tertiary qualified people is increasing at a faster rate than the state average. University qualified people generally earn a high salary. This is another sign that a wealthier demographic is moving in.
Landlord type – You should be looking for areas where the percentage of homes rented via the state or territory housing authority is either below the state average and/or the rate of decrease in government housing is faster than that of the state.
