what makes a suburb attractive

[plainsong]

Chatting to an agent while preparing to sell my PPR --
(at the Gap in Brissie), anyhow we were discussing why it's not a more sought after suburb,, Green, leafy, nice houses schools galore miniscule crime and 20 mins from the city...
He mentioned that its a good place to live but in his opinion
hasnt been a popular place to invest, he's not sure why... but
i agree with him,- makes you wonder what people want though.

If we knew where the next hotspot was going to be -
guess we would all be rich, it's a very interesting subject--


Cheers,

 

[Elwood or Bust]

Hi

I supose this brings me back to the theory (Which im an avid follower of) that if an area has not had a strong history of capital growth, then it could have all a suburb has to have, but that will count for nothing.

A suburb needs to have a trend of strong (10%+) capital growth for at least 10 years before i would even consider taking a look at it, although the longer the better. I may miss out on the price spikes that can occur in some areas over 2 years (thats happened now), but i avoid the risk of picking the wrong suburb.

 

[Mike]

From Home Price Guide

Houses      4061          Bayside North 
Average     $300,584      $213,095 
Median      $269,000      $160,000 
Median change over last 12 months
            +28%           +2% 
  
Units       4061          Bayside North 
Average     $188,500      $204,509 
Median      $0            $175,000 
Median change over last 12 months 
            SNR            +4%

According to HPG, 84 property sales were recorded in the last 12 months, mostly separate houses since 91% of the suburb has that type of dwelling. Capital growth is good which indicates some sort of demand. Perhaps not enough property is available to buy so the few that are available are going at good prices.

If your target buyer is a homeowner then should be no problems attracting them as this suburb is dominated by middleage homeowners. First-time homeowners may find the suburb too expensive. Only 17% of dwellings are rented.

Investors may be concerned by low rental population which could indicate a low rental demand. Reason could be rents too high or suburb doesn't have lifestyle facilities for rental demographic.

Are you trying to sell to homeowners or investors?

Regards, Mike

 

[Les]

G'day Mike,

HPG is very useful for a quick update - I've used it for some time - but one of the "nuisance" things is the area they specify as a comparison suburb.

e.g. in your example above, it appears they were comparing The Gap with Bayside North - say, wha??????


Another is when I check 4114 (Kingston, Woodridge in Logan) - and the comparison area is "Brisbane West"........ (checked a map recently guys??)


I just wonder WHO decides which area it should be compared to - sometimes it's akin to comparing Kirribilli with Blacktown !!!!!

Regards,

 

[Mike]

I agree with you, Les regarding Brisbane suburbs but Sydney regional boundaries seem about right.

Brisbane is peculiar, to say the least. For example, Redcliffe and Scarborough are considered Bayside South even though they are north of Brisbane. The Gap is considered Bayside North even though it is inland NNW of Brisbane.

I have contacted HPG for an explanation as the terminology is misleading. It probably is postcode related rather than geographically related. For example:

4059 and higher is Bayside North

4030 - 4055 is Brisbane North

4022 and lower is Bayside South

Enoggera Reservoir QLD (4060) Bayside North is actually west of The Gap.
Enoggera QLD (4051) Brisbane North is actually NE of The Gap.

So Bayside North actually appears geographically to be West Brisbane.

Back to property in The Gap...a search on www.realestate.com.au in the $200k - $300k range showed most houses and units currently listed above the median which suggests that solid growth is expected to continue in the short-term.

Two properties that may suit investors are:

http://www.realestate.com.au/cgi-bi...1&f=0&p=10&t=res&ty=&snf=rbs&cu=&fmt=&header=

and

http://www.realestate.com.au/cgi-bi...&f=10&p=10&t=res&ty=&snf=rbs&cu=&fmt=&header=

The last one appears to have reasonable rental yield of between 5 and 6%.

Regards, Mike

 

[plainsong]

Hi Mike and Les , yes I found the comparison odd too, The Gap is very like Chapel Hill and why they are using Bayside West as
comparision is beyond me, the two suburbs couldnt be less alike,
Must be postcode related as you said but that is hardly
a rational way to compare suburbs I would have thought...

I think there might be quite good rental demand here, the house next door to us has been a rental for about ten years -the longest vacancy I can remember is about 2 weeks in the whole time,

Ellwoods system of strong slow steady growth sounds like
a good method though, especially for buy and holding...

I have often wondered though -is picking the right suburb
mainly good business acumen or is blind luck a factor as well?
Often wondered..

Cheers,

 

[Mike]

Property Prices* 12 months to 31 March 2003 for postcode 2010  Surry Hills NSW
Houses     2010       City and East 
Average    $656,505   $1,098,276 
Median     $618,000   $832,500 
Median change over last 12 months
           +11%       +18% 
  
Units      2010       City and East 
Average    $405,718   $513,269 
Median     $361,250   $420,000 
Median change over last 12 months
           +10%       +10% 


Property Prices* 12 months to 31 March 2003 for postcode 2037  Glebe NSW
Houses     2037       Inner West 
Average    $689,089   $657,286 
Median     $635,250   $582,000 
Median change over last 12 months
           +11%       +16% 
  
Units      2037       Inner West 
Average    $457,147   $430,828 
Median     $380,000   $375,000 
Median change over last 12 months 
           +14%       +17% 


Property Prices* 12 months to 31 March 2003 for postcode 2042  Newtown NSW
Houses     2042       Inner West 
Average    $532,072   $657,286 
Median     $501,000   $582,000 
Median change over last 12 months
           +11%       +16% 
  
Units      2042       Inner West 
Average    $315,681   $430,828 
Median     $310,000   $375,000 
Median change over last 12 months
           +5%        +17% 


Property Prices* 12 months to 31 March 2003 for postcode 2016  Redfern NSW
Houses     2016       City and East 
Average    $559,065   $1,098,276 
Median     $550,000   $832,500 
Median change over last 12 months
            +33%      +18% 
  
Units      2016       City and East 
Average    $381,486   $513,269 
Median     $365,000   $420,000 
Median change over last 12 months
           +10%       +10%

Hi Plainsong,

I like to buy in areas that attract good quality tenants because I don't want tenant hassles. Now, those areas usually do no better than average growth because while they are desirable they are not going through a process of gentrification which usually creates the best capital growth. One exception I bought into was a new suburb called Glenmore Park NSW which has had strong growth (+20% past 12 months) in the past couple of years because of its newness and quality housing being built there. But it is nothing more than a housing estate right now and nearby Penrith is where the major facilities are.

What is gentrification?

"The restoration and upgrading of deteriorated urban property by middle-class or affluent people, often resulting in displacement of lower-income people."

Example: Redfern NSW 2016

"It is the centre of Sydney's inner city aboriginal community but is under the usual pressures of gentrification, due to its proximity to the city centre." [Redfern is 2.5km from Sydney CBD]
http://www.geocities.com/townsville_transport/sydney/redfern.html

If you look at the growth statistics above you can see that Redfern had much better house price growth in the last 12 months than the other three established suburbs around it. The demographic of Redfern is changing and becoming similar to those of Surry Hills, Glebe and Newtown. So these well paid city professionals are gradually moving into Redfern which is more affordable than Glebe and Surry Hills.

Redfern may have had ordinary growth in the past so you have to be careful of past 10 year growth statistics. However, Redfern will be out-performing many suburbs over the next 10 year period.

Regards, Mike

PS Is this blind luck or sound reasoning based on research data?

Strategy: Use Home Price Guide demographic snapshot and list suburbs with highest % of professionals and 20-39 age group. Use a map and locate a suburb that has these demographics but in a lower proportion to adjacent or nearby suburbs. This is where this demographic will move into when the others become too expensive. Hope this helps.

.           Professionals    20 to 39 
Redfern         11%             45% 
Surry Hills     14%             52% 
Glebe           18%             44%
Newtown         20%             55%

Not surprising that the majority of people in these expensive suburbs are renters. But you can see that Redfern is gradually catching the other suburbs in that particular demographic.

 

[plainsong]

Hi Mike --well now I'm 60 its facinating to
look at areas that are now so very trendy that were 40 something years ago ratty slums, inner city always seems a safe bet though..

I think its more difficult in surburbia though,fashion seems to come and go, some go through these little spikes that Ellwood
mentioned and then nothing much happens for a long time ..

more unpredictable in the burbs it seems..but Im looking from the perspective of the not-at-all-streetwise.

Cheers..

 

[Mike]

Property Prices* 12 months to 31 March 2003 for postcode 2060 North Sydney
Houses     2060         Lower North 
Average    $1,024,406   $858,969 
Median     $908,000     $690,000 
Median change over last 12 months
           +5%          +18% 
  
Units      2060         Lower North 
Average    $566,899     $468,997 
Median     $480,500     $395,000 
Median change over last 12 months
           0%           +10% 


Property Prices* 12 months to 31 March 2003 for postcode 2067 Chatswood
Houses     2067         Lower North 
Average    $834,486     $858,969 
Median     $800,000     $690,000 
Median change over last 12 months
           +16%         +18% 
  
Units      2067         Lower North 
Average    $450,307     $468,997 
Median     $405,000     $395,000 
Median change over last 12 months
           +12%         +10% 


Property Prices* 12 months to 31 March 2003 for postcode 2077 Hornsby
Houses     2077         Upper North Shore 
Average    $532,934     $657,542 
Median     $490,000     $585,000 
Median change over last 12 months
           +18%         +14% 
  
Units      2077         Upper North Shore 
Average    $355,766     $402,983 
Median     $350,000     $371,000 
Median change over last 12 months
           +14%         +10% 


                   Professionals    20 to 39
North Sydney 2060     21%             46% 
Chatswood    2067     14%             34% 
Hornsby      2077     12%             32%

Hi Plainsong and Others,

This is another scenario I'd like you to look at and tell me what is going on here. Use Home Price Guide at www.homepriceguide.com.au if it will help. Clue: one of the common denominators these suburbs share is that they are all on the North Shore train line. Which of these suburbs would you invest in and why? Bear in mind that North Sydney office workers can get to Chatswood by train in 12 mins and Hornsby in 32 mins. Add an extra 11 mins to those trips for Sydney CBD office workers.

Regards, Mike

 

[plainsong]

Hi Mike, you've got me there ! I dont live in sydney
so I'm not familiar with their suburbs..but how about Chatswood.?

Bet that's the wrong answer though!

(Wow thats an expensive city..Sydney mortgages arent for the
faint hearted)

Cheers,

 

[Mike]

Hi Plainsong,

Just giving you another example showing a migration pattern of young professionals along a rail corridor and the effect on capital growth. In this example, of the three suburbs I mentioned, North Sydney is the biggest centre of employment for professionals followed by Chatswood and Hornsby, in that order. Problem with North Sydney is that it already has a high level of the professional demographic and so there is little room left for extra growth which is evident in the poor growth return in the previous 12 months.

However, Chatswood and Hornsby have still got room left for more growth in that demographic which obviously is responsible for most of the rental demand and, therefore, growth. While renters outnumber full owners in North Sydney, not so in Chatswood and Hornsby where the reverse is still the case. But more medium density construction will occur in Chatswood and Hornsby over the next 10 years so either would be a good suburb to invest in. Obviously, Hornsby has a lower entry price. One of the additional benefits Hornsby and Chatswood have is the Westfield Shopping Centre.

Westfield Hornsby

Major Attractions:

Over 320 stores
Grace Bros, David Jones, Target, Kmart, Coles and Woolworths
Gowings and Borders Books, Music and Cafe
Greater Union 9 Cinema Complex
Outdoor Restaurant precinc

Westfield Chatswood

Major Attractions:

Grace Bros, Hoyts,
260 specialty stores
3 hours free parking
Food court

Check out the House price growth figures in other suburbs
where other Westfield Centres are located. Not bad at all.

NSW stores:

Bondi Junction +17%
Burwood        +25%
Eastgardens    +16%
Figtree        +30%
Hurstville     +28%
Liverpool      +20%
Miranda        +28%
Mt Druitt      +28%
North Rocks    +18%
Parramatta     +15%
Tuggerah       +25%
Warrawong      +30%

QLD stores:

Carindale      +27%
Chermside      +32%
Strathpine     +23%
Toombul        +26%

Regards, Mike

 

[see_change]

Mike

Another way of looking at the North shore ( I Live there ) is that it has been subject to that well know property phenomena of he Ripple Effect.

We were the accidental benificiaries of this , timing our sale in pymble just after a 15-20 % increase in price in 2001 , and moving to wahroonga just before the same price hike hit there in 2002.

The lower north shore has always been one of the first places to move in any cycle , so it is one of the areas I will be watching closely in the next cycle as a sign to start gearing into property more aggressively.

see change

 

[investor]

Originally posted by Mike

Example: [b]Redfern NSW 2016[/b]

"It is the centre of Sydney's inner city aboriginal community but is under the usual pressures of gentrification, due to its proximity to the city centre." [Redfern is 2.5km from Sydney CBD]
[url]http://www.geocities.com/townsville_transport/sydney/redfern.html[/url]

If you look at the growth statistics above you can see that Redfern had much better house price growth in the last 12 months than the other three established suburbs around it. The demographic of Redfern is changing and becoming similar to those of Surry Hills, Glebe and Newtown. So these well paid city professionals are gradually moving into Redfern which is more affordable than Glebe and Surry Hills.

Redfern may have had ordinary growth in the past so you have to be careful of past 10 year growth statistics. However, Redfern will be out-performing many suburbs over the next 10 year period.
[/B][/QUOTE] 

Hi Mike 

I disagree with you here. 
Yes Redfern has seen some growth at the end of this boom however as you have stated it is only due to the surrounding suburbs becoming too expensive. There is a reason why Redfern had not experienced any considerable growth in the previous years and that is because no matter how much new development goes on there the commission houses are there to stay. They are not going anywhere.

Redfern was, is and will always be the slum of Sydneys inner city, the worst suburb there. 

That doesn't mean it doesn't experience growth, but it will be a spike at the end of a boom followed by quite afew years of inactivity as the surrounding suburbs become more affordable again. It will not outperform them at all.
Some parts of Redfern I wouldn't even drive through during the day forget about walking. Taxi drivers refuse to go through it at night, and you have to be a brave person to catch a train at Redfern station after 7:00pm at night  :p 

Regards

Investor   :)

 

[sanchez]

Investor

Surely the Department of Housing will one day, not necessarily in the near future, cash in and relocate to a cheaper area - or do you think that there would be too much political flak??

This begs the question, until this happens will the area remain undesireable, and thus will there be insufficient incentive for the Department of Housing / Developers to make these changes? Until then, I agree that no matter how "Gentrified" and area gets, it is hard for a buyer to overlook the housing commission towers next door when they are paying top dollar for an apartment.

Sanchez

 

[Mike]

Originally posted by Les

HPG is very useful for a quick update - I've used it for some time - but one of the "nuisance" things is the area they specify as a comparison suburb.

e.g. in your example above, it appears they were comparing The Gap with Bayside North - say, wha??????

Hi Les,

Got an answer back from Australian Property Monitors:

Hi Mike,

Thank you for bringing this to our attention. Bayside is a region we have created internally to group a number of suburbs together. Please ignore this information for now as we are reviewing this information to fall in line with the Local Government classifications.

Regards,

Anna Di Bartolo
Customer Service & Content Supervisor
Australian Property Monitors
[P] 02 9339 8200
[F] 02 9360 1123
[E] [email protected]
[W] www.homepriceguide.com.au

So what are the local government classifications?

 

[plainsong]

and what do they mean Bayside is a region they have created internally ?

now Im really confused......

 

[RPI]

Re: The Gap

IMHO Most places that are nice leafy suburbs that look attractive to families but are also a decent drive away from the CBD, Beach etc only seem to have done well if they are on the way somewhere. eg. they may have above attributes but they are oin the way to the coast, or another city and therefore there are more purchasers available. Eg. if one partner works in the city and the other works in the next city or on the coast then that nice leafy family suburb inbetween looks great. The Gap only has Brisbane Forest park on the other side of it and therefore gives the impression of being on the way to nowhere. The peak hour run to the city is also a nightmare.

This is by no means attacking the gap. It has great schools, a nice feel to it and looks like a great place to live, I'm jsut saying that if you were to compare it to another nice leafy suburb that was that far out of town but also inbetween the CBD and Ipswich, the CBd and the Gold coast, or the CBD and the Sunshine Coast that suburb could be more attractive.

Darryl

 

[plainsong]

The Gap only has Brisbane Forest park on the other side of it and therefore gives the impression of being on the way to nowhere. The peak hour run to the city is also a nightmare.

..........................................................................................................


Darryl you make a very good point!

That is a whole different way to look at a suburb, I never thought of those aspects..you're quite right..thanks for a different insight!
Best regards

 

[The Scumfactor]

Hi Mike

I disagree with you here.
Yes Redfern has seen some growth at the end of this boom however as you have stated it is only due to the surrounding suburbs becoming too expensive. There is a reason why Redfern had not experienced any considerable growth in the previous years and that is because no matter how much new development goes on there the commission houses are there to stay. They are not going anywhere.

Redfern was, is and will always be the slum of Sydneys inner city, the worst suburb there.

That doesn't mean it doesn't experience growth, but it will be a spike at the end of a boom followed by quite afew years of inactivity as the surrounding suburbs become more affordable again. It will not outperform them at all.
Some parts of Redfern I wouldn't even drive through during the day forget about walking. Taxi drivers refuse to go through it at night, and you have to be a brave person to catch a train at Redfern station after 7:00pm at night

Regards

Investor [/QUOTE
Hindsight can be a funny thing sometimes!

 

[strongy1986]

Hi Mike

I disagree with you here.
Yes Redfern has seen some growth at the end of this boom however as you have stated it is only due to the surrounding suburbs becoming too expensive. There is a reason why Redfern had not experienced any considerable growth in the previous years and that is because no matter how much new development goes on there the commission houses are there to stay. They are not going anywhere.

Redfern was, is and will always be the slum of Sydneys inner city, the worst suburb there.

That doesn't mean it doesn't experience growth, but it will be a spike at the end of a boom followed by quite afew years of inactivity as the surrounding suburbs become more affordable again. It will not outperform them at all.
Some parts of Redfern I wouldn't even drive through during the day forget about walking. Taxi drivers refuse to go through it at night, and you have to be a brave person to catch a train at Redfern station after 7:00pm at night

Regards

Investor [/QUOTE
Hindsight can be a funny thing sometimes!

Mike are you out there!! ??