The top 24 suburbs for a range of investment strategies and the 24 suburbs to avoid. If you’re after High Yield, Capital Growth, Low risk, Flips. We have a list for you…

Can’t get enough hot spots? Here’s another 120 suburbs worth considering. Using our own demand to supply ratio calculations, we’ve pulled out the top 24 suburbs for a range of strategies and threw in another 24 suburbs to avoid.

As we all know, every investor is unique. Some investors have loads of equity but poor cash flow. Some have good cash flow but little equity. Some investors have lots of spare time while others have to look hard to find it. Some are close to retirement while others are early in their accumulation phase. Some have a penchant for renovations, others just want to buy and hold.

To help you kick start your research, we’ve compiled a list in the following tables catering to a range of strategies and sourced using the demand to supply ratio (DSR) data for October 2012. A few restrictions were applied:

• Only markets with a statistical reliability of 62.5% or higher were allowed. This equates to a statistical reliability of 5 or higher out of 8.
• Only markets with a decent level of stock on market (SOM) were considered. If the SOM is too low, you can’t find anything to buy. So all markets shown had at least seven properties for sale at the time the data was accumulated.
• We’ve chosen markets based firstly on DSR and secondly on another key statistic like “yield” or “typical value”. The DSR should be your first consideration for a healthy market to invest in.
• Some investors don’t want to buy in areas they have no prior knowledge of, so we’ve included the top markets in each state rather than the top markets in Australia. This is in case one state dominated a particular list. So some of these locations may not have a very high DSR.

These kind of lists should only be used as a starting point of further due diligence. As with all statistics, be sure to apply some sanity check to the data by performing your own fundamental research. Check that the data makes sense and is still current.

Top 24 high yield, excellent growth markets

Capital growth is what makes investors truly wealthy. But you can’t ignore cash flow. Table 1 lists the top three markets in each state that have both excellent potential for capital growth and great cash flow too. Keep in mind that these are the typical yields for each market. There are likely to be individual properties for sale in these markets that have yields higher than the average for that market.

Top 24 cheap suburbs with excellent growth potential

If you’re a little short on equity or serviceability, you may need to go cheap. Table 2 lists the top markets for immediate capital growth by DSR but with affordable prices.

Top 24 suburbs for renovation flips

If you’re planning to buy, renovate and then sell, you’ll need to know that the market you’re investing in will support a quick sale. Table 3 is a list of markets with high DSR as well as low days on market (DOM).

Top 24 low risk suburbs

If you’re worried about a newly purchased investment property experiencing an extended vacancy period, you’ll be interested in the data in table 4 which shows high DSR markets with low vacancy rates. The list compiled also considered the proportion of renters in the market. A low proportion is preferable so there is less competition amongst landlords for tenants.

Top 24 high growth potential

The key to profitable property investment is invariably strong capital growth. The DSR combines a number of statistics into an overall score of the potential for capital growth due to the imbalance of demand and supply. Table 5 shows a list of the top scoring markets for each state by DSR.

24 low growth potential, best to avoid

Some markets have an over-supply or are in low demand from buyers. These markets are best to avoid since they are unlikely to deliver much in the way of capital growth. Table 6 shows a list of the lowest markets by DSR for each state. Note that some of them aren’t that bad. If you have a unit in Greenway ACT or Rapid Creek NT for example, don’t feel
pressured to sell.

To discuss this article or anything to do with your finances, please call our office today and we will be happy to assist you.