Finding the best suburbs for investment isn’t as simple as following a list of property hotspots or choosing the area with the strongest recent growth.
A suburb might look promising on paper but tell a very different story once you dig into rental demand, property prices, local demographics and what’s planned for the area.
And, of course, a great suburb doesn’t automatically make every property in it a great investment.
So, before you fall in love with a leafy street or an impressive café strip, here’s what you should be looking at.
What makes the best suburbs for investment?
Start with the numbers, but don’t rely on just one.
Vacancy rates can help you understand rental demand, while median rents and rental yields give you an indication of how rental income compares with property prices.
It’s also worth looking at:
- Historical property price movements.
- Days properties spend on the market.
- Population growth.
- Household income.
- Employment trends.
- The proportion of renters and owner-occupiers.
No single statistic can tell you whether a suburb is a good investment.
Instead, look at how the different pieces fit together and whether you’re seeing consistent trends rather than one impressive number.
What are tenants looking for in the area?
Data matters, but so does the way people actually want to live.
Schools, public transport, employment, shops, green spaces and other everyday amenities can all influence demand for a particular location.
But different tenants have different priorities.
A professional commuting to the CBD might value transport connections and travel time. A family may be more interested in schools, parks and access to everyday services.
When you’re comparing the best suburbs for investment, think about who is likely to rent there and why they would choose that area over somewhere else.
The question isn’t whether you would like to live there.
It’s whether the location and property meet the needs of the tenants you’re hoping to attract.
What’s planned for the suburb?
Don’t only look at what an area offers today.
Council plans, zoning changes, infrastructure projects, new housing developments and commercial investment can all change a suburb over time.
Improved transport connections, new services or additional employment opportunities may increase the appeal of an area.
But development isn’t automatically positive for an investor.
A significant amount of new housing, for example, could increase the supply of rental properties and affect competition within the local market.
The important thing is to understand what’s planned and consider how those changes could affect the particular property you’re thinking about buying.
Does the individual property stack up?
Suburb averages are useful, but they only tell part of the story.
Two properties a few streets apart can offer very different investment prospects.
One might be within walking distance of transport, shops and schools. Another could be on a busy road, have limited parking or sit further away from the amenities local tenants value.
Then there’s the property itself.
Its size, condition, layout, parking, outdoor space and suitability for local renters can all influence demand.
Instead of simply asking:
“Is this a good suburb?”
Ask:
“Is this the right property, in the right part of the suburb, for the market I’m trying to attract?”
That’s a much more useful question for an investor.
What should you research before buying?
Before deciding where to invest, take a broader look at:
- Current vacancy rates and rental demand.
- Rental yields compared with surrounding areas.
- Historical property price movements.
- Population and employment trends.
- Access to transport, schools, shops and other amenities.
- Planned infrastructure and development.
- New housing supply.
- The types of tenants living and looking in the area.
Then bring all that information back to your own budget, investment strategy and appetite for risk.
The best suburbs for investment won’t necessarily be the same for every investor.
Why does local knowledge matter?
Online data can tell you a lot, but it doesn’t always tell you what’s happening on the ground.
A local property manager is regularly speaking with prospective tenants, conducting inspections and seeing which properties generate interest and which ones struggle.
They can provide insight into the features tenants are asking for, the types of properties attracting interest and how demand can differ between pockets of the same suburb.
That local context can be particularly valuable when you’re trying to make sense of all the numbers.
If you’re considering buying an investment property in Adelaide, the team at AMKAR Real Estate can provide local rental market insight to help you better understand the suburbs and properties you’re considering.
Disclaimer: This article provides general information only and does not constitute financial, investment or property advice. Property markets can change and past performance is not a guarantee of future results. Always conduct your own research and seek independent professional advice appropriate to your circumstances before making an investment decision.