3 ways to spot an up-and-coming suburb
Grant Gavin, real estate expert and broker/owner of RE/MAX Panache lists his top three 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.”
- Watch for spill over areas
“Up-and-coming suburbs are often spill-over areas that neighbour existing established suburbs. These communities are just outside where all the growth is happening. Property prices are usually more affordable in these areas but are still within close proximity to all the action of the established suburb. Over time, homeowners invest and renovate older properties and the spill over suburb catches up in value as demand keeps growing.”
- 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 warns 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.”
As a final piece of advice, Gavin suggests that there are several ways for investors to keep up to date with the latest investment hot spots, including befriending a network of reliable real estate advisors. “Nobody knows an area better than those who work on the ground every single day. My advice to investors is to build a network of productive real estate professionals who know the market nuances better than anyone else and can keep you abreast of real time property sales per square metre pricing, rental yields, number of days on market, and % of selling price to asking price,” Gavin concludes.