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5 reasons inner-ring suburban properties will outperform - featured image

5 reasons inner-ring suburban properties will outperform

In the months and years ahead, which areas of our capital cities do I believe will outperform the averages? Suburb House

Well, it's clear to me that it's the inner-suburban locations of our biggest cities that will continue to be in strong demand from buyers.

That's because more young people want to live in these locations — and especially newly arrived overseas migrants who are used to living in apartment, units or townhouses.

Plus, the economic fundamentals of inner-suburban locations (not to be confused with inner-city areas that are prone to oversupply) remain sound for the following five reasons.

1. More jobs

According to the Grattan Institute, close to 60 per cent of all national jobs growth between 2006 and 2011 occurred less than 10 kilometres from city centres. 

While we don't have more up-to-date figures, it's unlikely that this trend will change anytime soon.

That's because our economic and financial hubs remain in CBD or fringe-city locations, and this is where  the majority of highly paid people work.

Of course, not everyone wants to live down the street from their office.

But most people don't want to be commuting for hours every day to get there.

That's why many will opt to live in inner-suburban locations so they're close to work — but still far enough away.

2. More money

Research has revealed that those people who work within 10 kilometres of our five major cities were $20,000 a year are better off than their counterparts employed 20 kilometres or further from the CBD. 4 Money Check

What does this mean in reality?

Well, of course, living closer to the city does cost more money, which means that those residents usually earn higher than average incomes.

And that's the point.

Investment grade locations are the ones where increasing number of affluent buyers want to live – and they're able to and prepared to pay for the privilege.

And that means that inner-suburban locations will remain the pick of investment locations because that demand will inevitably drive up property prices.

Cafe And Bars3. More amenity

It wasn't that long ago that our inner- and middle-ring suburbs were still home to manufacturing and light industry.

They've mostly moved on now and their vacant spaces have been converted into funky apartments or townhouses.

Near those new properties has also arisen new cafes, bars, and barbers to cater for the new upwardly mobile population.

And the more amenity that is created in inner-suburban locations, the more people will be attracted to live in those areas.

Art Place4. More lifestyle

That in turn creates additional lifestyle precincts where well-heeled locals and visitors like to congregate.

Perhaps it's an exclusive restaurant strip or an area known for its organic produce and super-food outlets.

Locals spend their time, and their money, in these retail offerings, and visitors dream about being able to walk there instead of driving.

Soon enough, those visitors will become locals and because the locals probably don't sell very often, property prices will keep on rising.

5. More desirable

The more desirable a location, the more people want to live there because that is human nature.

The bonus for most inner-suburban locations is that they're not necessarily the top of the property food chain.

They are aspirational suburbs that a greater proportion of the population can afford to buy into. Suburbs Australia

Rather than prestige locations that are only financially available to the privileged few.

Inner-suburban locations are desirable by a greater cohort of potential buyers which, again, means that properties are priced at an achievable premium but will continue to rise with demand.

At the end of the day, inner- and middle-ring suburbs will remain some of the most in-demand locations in Australia.

Their transformation from working class locations is well and truly over.

There is a new breed of residents in town now.

And they're not moving anywhere else anytime soon.

About Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.
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