Crime rates in affordable suburbs

[PS: Moderator - could this be kept in the general forum?]

Something interesting...

Earlier this year when I was researching Melbourne suburbs in which to buy properties, I looked at a few of the more affordable, or cheaper suburbs that are still relatively close to the CBD.

For instance, Footscray and Seddon in the inner-western suburbs, and Preston in the inner northern suburbs.

These suburbs have traditionally had a demographic with a lower socio-economic background, and have had some stigma associated with them with respect to drug use, and also crime rates.

For these suburbs I calculated a "crime rate" - which was: (the number of crimes reported in the last 12 months/the total population of the suburb) X 100. This gives a percentage figure for the "crime rate". Eg, 5%, which would mean there are 5 crimes reported for every 100 people in the suburb.

Using crimes reported data from the Victoria Police and the Australian Bureau of Statistics population figures I got the following results:

1. Footscray and Seddon (combined figure - they are neighbouring suburbs and I could only get a combined "crimes reported" figure from Victoria Police)
Crime rate = 28%!!!
2. Preston
Crime rate = 18%

These seem quite high and do seem to match the "perception" that is commonly attached to these suburbs.

As a comparison, the figures for some blue chip eastern suburbs in Melbourne are shown below:

1. Camberwell
Crime rate = 8%
2. Doncaster
Crime rate = 6.7%
3. Balwyn
Crime rate = 1.9%!!!

Clearly these figures are significantly lower, though only perhaps to be used as a rough guide or indication.

I thought this was interesting, something to think about when buying at the "bottom end" of the market.

Anyone have any thoughts/comments on this?

GSJ

Useful Tool

GSJ

How can this percentage be used to determine the success of the property in regards to yield/growth?

Did you find that the higher percentage suburbs performed poorly or are they better?

OneLife

Hi - just some thoughts

surely it would depend what suburbs you are talking about? One of Perth's wealthiest suburbs (Mosman Park) has two extreme sides to it. On the river side it has million dollar properties and on the highway side- many flats. we used to live there and had many a strange person in our front garden and attempted break ins. Our insurance rate was much higher in this suburb. I thought that it was an opportunist's paradise. I'm sure there are examples like this in every state. We have lived in other suburbs where people are thoroughfaring to a popular place (beach, shops) and the crime was higher. most suburbs would have bad patches - unfortunately housing trust homes and blocks of flats tend to be quite stereo typical for higher levels of crime. I would still rather buy in a perceived safer suburb for PPOR, but happy to have IPs elsewhere. (call me a snob if you like!)

Thank god for good watch dogs!

Meg

Also, I think that crowd magnets like large shopping centres, inner city attractions, beaches, railway stations etc can really skew crime figures from typical for the area, due to the crime eminating from those sites.
Eg. Bustling Camberwell 8% vs. quiet-ish Balwyn 1.9%, both upper class neighboring suburbs.

units4me said:

Also, I think that crowd magnets like large shopping centres, inner city attractions, beaches, railway stations etc can really skew crime figures from typical for the area, due to the crime eminating from those sites.
Eg. Bustling Camberwell 8% vs. quiet-ish Balwyn 1.9%, both upper class neighboring suburbs.

Click to expand...

This is true; big shopping centres = car theft, pubs & clubs = bashings, retail strips = burglaries etc.

To test this effect, it might be worth looking at small suburbs that are dominated by their crowd magnets. For instance Chadstone Shopping Centre is in East Malvern (not Chadstone, which is an adjacent residential suburb near Ashburton/Ashwood!).

There are a couple of measures that could well be more important than the crime rate as such.

One is the trend in the crime rate (particularly relative to the metropolitan average). This might show that an area is 'cleaning up'. An area with a high crime rate that is rapidly falling could well be the next boom suburb. While other buyers were scared off due to the high crime rate, you were able to pick up bargains and enjoy higher than average capital growth by buying in a gentrifying area.

Note that you can do all sorts of things with statistics. For instance an area might have a crime rate of 50% more than the metropolitan average, and hence be considered 'rough' and deter buyers. However if the victimisation rate for that particular offence is 0.1% then it would be 0.15% in that area. In other words a non-victimisation rate of 99.85% vs 99.9%, which isn't much difference when looked at it another way.

If a particular property stacks up and there are improvements in the area then it could still be worth buying if your strategy includes 'timing the market'. An example of such a place where investors have done well during a time when the commentators said the property market was flat is Geraldton, WA (see the latest API for more!), but similar comments also apply to outer suburban areas like Frankston as well.

Also the type of crime is important. I was looking at some stats for break and enters some time ago. The high crime suburbs for these were often high-status inner suburban areas. These are the same areas that are considered by many to be 'blue chip', and sure enough have enjoyed solid capital growth rates over the longer term. That some types of crime are high in these areas doesn't seem to have reduced that suburb's prestige and capital growth.

Peter

Trends versus Single Figures

Peter,

Thanks for that reply. I think you make an excellent point in looking at trends in crime rates rather than an individual years figures, and watching for gentrifying suburbs. Also, as you said, statistics can be used to do all sorts of things, so it's important to put it all in perspective.

GSJ