For many Australians looking to break into the property market this year, it is crucial to consider areas that could offer a good return on investment in the longer term, said REA Group chief economist Nerida Conisbee.
When looking for suburbs with high growth potential, buyers need to consider four things, Conisbee said in a think piece in Realestate.com.au.
One of the most significant considerations is the area's proximity to the city in terms of distance and access.
"Generally, public transport would be in demand not just for buyers, but for renters. So, either suburbs offer really good value and are close to the city, or offer good access to the city — those things can make a difference," she said.
Investors should also be on the lookout for areas experiencing high gentrification and strong population growth. With high population growth, it is more likely that an area would experience strong rental demand.
Conisbee said investors will get better long-term capital and rental growth in areas with high levels of gentrification.
"You do get a lot of young people move in and they improve the housing stock. They have high demand for better retail precincts, so they start to change. You also see schools change as well," she said.
Western Sydney is an example — the region is becoming a major hub for education due to the investment for the Western Sydney University and the University of Sydney.
"Most renters tend to be young. Universities can lead to strong rental demand or a precinct like a hospital, that has a high employment base, can also lead to high rental demand," Conisbee said.
Lastly, investors should go after areas with quality projects. Conisbee said these properties offer the best return on investment in the long run.
