Where to find property’s next big thing

It’s the question burning on the lips of property investors everywhere – where is the next big thing? Australian Property Investor (API) magazine took up the question and revealed some of the hottest tips for finding future capital gains nationwide.

API editor Eynas Brodie said some of the answers might come as a surprise.

“Suburbs stigmatised as downmarket, areas dismissed as retirement havens and urban areas soiled by industrial uses might not sound appealing, but as our research showed, thinking outside the square can pay good dividends.”

Three of the five top tips revealed in API recently include:

1. Ugly ducklings that may evolve into swans
Watch for suburbs which may be considered a bit “on the nose” but have the potential for transformation. Such rags to riches stories are common around Australia. Think Bulimba in Brisbane, Richmond in Melbourne, Leichhardt in Sydney and Henley Beach in Adelaide.

Financial advisor and author of several real estate books, Margaret Lomas, told API that many investors rejected such areas because they allowed emotion to intrude on their decision-making.

“Just because an area today is ‘on the nose’ doesn’t mean it’ll have that stigma forever,” she said.

2. Moving into retirement havens
High-profile demographer and a partner with KPMG, Bernard Salt, urged investors to seek out the “grey areas” with potential for change.

“The place to buy property is in an urban area where there’s a high proportion of elderly people,” Salt told API. “Those areas are likely to go through a re-generation as the older generation passes on.”

3. Rents going up and prices coming down
While house and unit prices have fallen in some eastern capitals in recent years – most notably Sydney – rents are on the way up, and the rental market is tightening. This presents opportunities for investors to buy well and find stronger yields.

Mrs Brodie said it was important investors used the tips wisely and put potential investment properties through the same tests they normally would before signing on the dotted line.

“Unlike the frenzied activity we saw in the recent boom, today’s more balanced market conditions give investors some breathing space to be able to locate and thoroughly research their next purchase, and this investigation will give them some clues about which rocks to look under,” she said.