Finding the next suburb to be the next big thing – and experience significant price gains – is about finding suburbs that are primed for gentrification. But this is more art than science.
A serious sign of gentrification is when the artistic community starts to move into an area. They inspire fresh commercial activity, which leads to greater investment in amenities by a council or local area authority.
Huge real estate gains can be made by picking a suburb that is in the early stages of following this path.
Gentrification doesn’t happen overnight, so the window of opportunity is relatively larger. Transformation can take between up to 30 years.
Whether you’re looking for a family home that will gain in value, or an investment property, experts say the biggest gains can be made by early entry into the market and then flipping the property in a five to 10-year timeframe.
That said, it is not time in the market that counts but your timing for when you enter and exit.
Be aware that gentrification, and the value gains from property that accompany it, do not last forever. Eventually, the market matures, prices stabilise and the opportunity evaporates.
Buyers should conduct due diligence on a suburb to ensure it has all the vital signs of gentrification. An agent and the latest Australian Bureau of Statistics data can guide you on this.
Signs your suburb is undergoing gentrification:
- Properties are generally run down
- Rents are cheap and there is a surge in warehouse living
- Properties on the market are dominated by fixer-uppers, or knock-downs
- Creative people move in and there is a plethora of new coffee shops
- ABS figures show there is a higher percentage of childless couples in the area and single female professionals
- There is a higher than average number of people living in the area who were living at a different address five years ago
- High disposable incomes in the area rise; and
- Local authorities or council start to improve amenities in the area