The market may be slowly beginning to turn around, but it still hasn’t returned to the lofty heights of two years ago. Knowing which suburb is in a low patch but could be expected to raise in median house value could mean the difference between investment making or breaking in 2020.
There are methods of predicting the property tide used by our experts. One is reading the ripple effect.
How do I know which suburb will explode?
In cities, various factors can cause the value of a suburb to rise (ie; gentrification). Usually, the inner city will rise first. What can happen is that the values of properties in the suburbs surrounding it will also rise, as the buyers that view inner city as too expensive will turn to the surrounding suburbs as the next most affordable but desirable option, and so the ripple will spread.
This push outwards is not the only influencer – there can also be a pull. This happens when factors occur that can influence outer-fringe suburbs (ie; drought). Property prices drop, and then they will then attract buyers from inner suburbs seeking less expensive property – pulling buyers outwards.
As inner rings get vacated and prices drop, it creates a decrease in price in those inner suburbs, and ripple heads back in.
And vice versa – if you have a particularly strong-performing suburb, it will eventually become saturated (overpriced) and will experience a correction as people seek a less expensive or less crowded environment – the ripple will swing the other way.
Understanding this correction – the turning point – is the key. If a suburb is performing well, it may not have many legs left. Have a look at surrounding suburbs, as they will be next to boom.