How to spot up-and-coming suburbs

Knowing where and when to purchase can make a significant difference in the kinds of returns one can expect to generate.

According to Adrian Goslett, from RE/MAX, the guidance of an industry expert plays a crucial role towards helping buyers and sellers make sound real estate investment decisions.

“Just as one might consult a financial advisor before deciding on an investment fund, consulting a real estate advisor can help buyers make an informed decision when deciding upon a suburb in which to invest,” Goslett explains.

One such real estate expert is Grant Gavin, from RE/MAX Panache. Below, Gavin lists some tips on how to spot an up-and-coming suburb.

Rental prices increase

Rental returns are always a good indicator of demand to live in a suburb. A good sign is that rental prices in a suburb start increasing in value. This is a demand signal that often results from buildings having been upgraded and landlords having invested into their properties. Alternatively, an increase in rental demand could be as a result of tenants moving into the area because it is cheaper than an area that is more established. Soon, this demand will drive up prices and the suburb will become more established over time.

Read: Property investment for retirement savings

New schools and shopping centres

Watch out for new schools and shopping centres as these are sure signs of future suburb growth and ultimately price appreciation. Renovations or upgrades to existing schools and shopping centres could also stand to increase the appeal of the suburb and bolster property values.

Quite opposite to the points discussed above, Gavin also warned buyers of the potential red flags that signify that a suburb is about to lower in value. Vacancies and rental decreases are a sure sign that demand is dwindling. Investors should also watch for municipal planning changes where industrial or commercial zones start invading residential spaces. Similarly, suburb deterioration can happen very quickly when municipalities neglect basic services, so keep an eye out for municipal parks and common spaces looking over-grown and piling up with litter.”

• Information supplied by Private Property.

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