A new report has revealed the nation’s top five cheap investment hotspots, claiming to offer strong capital growth prospects for a lower fee.
Of the listed locations within Hotspotting’s Top 5 Cheapies with Prospects report, none were to be found in Australia’s most populous states — NSW and Victoria.
Instead, two are located in Perth and Adelaide, while a single region is in Brisbane.
At the moment, each of these suburbs could be considered “ugly ducklings”, according to Hotspotting director Terry Ryder.
But, he believes they possess all the hallmarks of becoming a “real estate swan” in the future.
To develop its conclusions, the report considered the combined power of four property metrics:
– Rising sales activity with potential for capital growth
– Plenty of houses at affordable prices
– Strong infrastructure, both existing and planned
– Proximity to major job nodes
Mr Ryder said the listed suburbs “are places considered unattractive by those looking through uneducated eyes, but they have the potential to transform into real estate swans.”
“The significance of these areas in the residential market has grown because affordability has become a headline issue in the housing industry, which is one reason why the cheaper areas of our capital cities have recorded good capital growth over time.”
Research has found Australia’s “cheaper areas undergoing gentrification are among the strongest performers on price growth in our major cities.”
He warned that not every cheap area has the potential for booming growth and outlined that “the task for property investors is to identify the areas that have reasons to outperform.”
Australia’s five “cheapie” suburbs with prospects are:
City of Playford, South Australia:
Located north of Adelaide, the region is the fastest-growing local government area (LGA) throughout the whole state and boasts a number of key factors driving it to its high perch, including multiple major job nodes, affordable prices and high yields, the Edinburgh Defence complex, the $175 million Playford Health Hub and $250 million Playford Alive Town amongst others.
Mr Ryder labelled the RAAF base in Edinburgh as “the engine room” of the region’s economy and is “stoking it further with billions of dollars being spent on technology, equipment, and infrastructure.”
Moreover, in 2020, the Northern Connector, a 16-kilometre, six-lane motorway linking northern Adelaide to key freight transport infrastructure, opened with both projects boosting opportunities for trade and business.
A primary example of this activity is the residential community in Riverlea. The $3 billion project created 10,000 jobs so far.
“These projects have added considerable impetus to the area, which already has the state’s strongest population growth and some of the cheapest homes in capital city Australia.”
City of Armadale, Western Australia:
“It is the fourth fastest-growing local government area in Western Australia and has some of the most affordable houses of any capital city,” surmised Mr Ryder.
The region boasts a hefty industrial area that includes a $4 billion container port, a $1 billion hydrogen plant, $635 million rail line and station, and $4.3 billion shipbuilding project amongst others.
He added, “Numerous government incentives for first home buyers are a beneficial factor for the young families who dominate Armadale’s landscape.”
Located on Perth’s south-east transport corridor, the LGA “has been marked for future infrastructure development by the federal government, encouraging business, industrial, and residential projects.”
City of Salisbury, South Australia:
Defence projects worth north of $4 billion, the $1.9 billion Edinburg Parks Precinct, an $885 million transport corridor, a $240 million health hub, the Gawler train line electrification, and a $250 million GMH site redevelopment are some of the projects the region’s construction boom has birthed, creating thousands of jobs along the way.
Mr Ryder explained the local economy’s resilience during the pandemic’s lowest points inspired property prices into double-digit growth that continued throughout 2022 and is expected to remain for the rest of the year.
“Construction on the $1.9 billion Edinburgh Parks precinct is now underway and is dedicating space to multiple industries, including aerospace and manufacturing, defence technology, food manufacturing, logistics support, and automotive industries.”
Such projects are attracting major companies to the area, further fuelling its employment boom and stimulating the property market. Mr Ryder revealed that “all this activity has buoyed the property markets and is seeing rents rise along with strong yields and extremely low vacancy rates.”
“This attractive combination is providing opportunities for entry-level investors,” he declared.
City of Gosnells, Western Australia:
Described by Mr Ryder as being “strategically located on Perth’s south-east transport corridor, and on the Armadale train line, it is easily accessible to the Perth CBD and the Kwinana and Rockingham employment nodes.”
The region’s infrastructure pipeline includes projects such as a $4 billion container port, a $1 billion hydrogen plant, $2.5 billion pencilled in for road upgrades and a $4.3 billion shipbuilding project, with future infrastructure development projects earmarked by the federal government further “encouraging business, industrial, and residential projects.”
These projects are further supported by low vacancy rates and a recent uptick in sales activity, according to Mr Ryder.
City of Ipswich, Queensland:
Job growth and population increases are some of the hallmarks of the Ipswich economy, Mr Ryder explained, adding that “for some years, it has been one of the fastest-growing regions in South-East Queensland.”
Ipswich’s strong economy is boosted by several projects, including a proposed $1.7 billion fast rail link, the $12 billion Springfield community, $1.5 billion Springfield rail link, the $1 billion Citiswitch project, a $2.8 billion motorway upgrade, and a $5 billion Australian Defence Force contract.
“Other core elements of Ipswich’s appeal are accessibility, affordability, and infrastructure,” he added. The region is well supported by several transport links, including highways, railways, and motorways while boasting median house prices within the $400,000 to $500,000 range.
Bolstering the Ipswich economy is the presence of several billion-dollar enterprises, which Mr Ryder revealed as including “major national companies and government departments moving into the area.”
“Longer-term planning includes a fast rail service between Ipswich and Brisbane along with extended rail links from Springfield to Ripley and Ripley to Ipswich via Yamanato,” he concluded.