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Australia’s best buy locations are looking less blue chip and more blue collar, according to a new report.
Australia’s housing market collapse is leaving blue-collar areas once looked down on by “real estate snobs” set to outperform the blue-ribbon addresses.
As soaring interest rates make affordability king, Tasmania’s Glenorchy region as well as pockets in the southern parts of Queensland’s Logan municipality have been named as among the best buying opportunities in the country by influential property pundits Hotspotting.
They’re also doubling down on earlier predictions that units could be in for their best run since the 1970s, partly as homebuyers respond to a greater focus on safety.
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The firm also name the once-working class Canterbury-Bankstown segment of NSW, and the Darebin area of Victoria, in their top five areas offering the best value for money and the best prospect for the best growth in the next seven to 15 years.
While the group saw little value in South Australia after years of surging home values, they named three of the nations’ 10 best regions as being in Victoria, including Wodonga and Warrnambool.
The Hunter Valley in NSW, Burnie in Tasmania and Toowoomba in Queensland also made the list.
This two-bedroom unit in Chigwell, in the Glenorchy region of Tasmania, sold for $440,000 earlier this month.
Bankstown in NSW was ranked second on the list. A two-bedroom unit like this in the suburb recently cost $635,000.
Hotspotting founder Terry Ryder said it had become clear over the years that “a stigma for being down market or lower socio-economic doesn’t stop areas from delivering strong capital growth”.
Mr Ryder said six-figure surges for a two-bedroom unit in the Logan area in recent years had already proven the point, but that as interest rates rose and borrowing capacity fell, “affordability rules” and areas with cheaper home prices as well as a pipeline of infrastructure, particularly healthcare, would be positioned well.
“Prices aren’t falling everywhere, it’s the top end having the biggest decline in values, and many of the first-home buyer areas are holding up very well,” Mr Ryder said.
“And, when it comes to where people are choosing to buy, they don’t care if the real estate snobs look down on them.
“And that doesn’t stop those areas from showing good growth, so people need to keep that in mind. Don’t let a bad reputation stop you from looking at what’s there.”
Australia’s Best Buy Regions
Glenorchy, Tasmania
Canterbury-Bankstown, NSW
Southern Logan, Queensland
Darebin, Victoria
Wodonga, Victoria
Hunter Valley, NSW
Burnie, Tasmania
Rockingham, Western Australia
Toowoomba, Queensland
Warrnambool, Victoria
Areas are assessed based on future growth driving infrastructure projects, affordability today, and are being assessed over the next five to 10 years. In many of the areas, units will be the main beneficiaries of workers needed for major projects as well as core employment hubs around education and healthcare.
Source: Hotspotting Best Buys Report
Units are back on the radar in a way that hasn’t happened since the 1970s, according to Hotspotting’s Tim Graham.
“People are living differently and looking to lock up and leave,” Mr Graham said.
“And they are safer. There’s more eyes and if you scream, somebody hears you and there’s more people in the complex who might be able to lend a hand.”
While affordability compared to houses in the same areas was giving units an edge they were still advising against mega apartment buildings with the cheapest homes.
Instead, they’re expecting units in smaller complexes of six or eight that were built solid and date back to about the 1950s or 1960s to do quite well in the coming seven to 15 years.
Real Estate Institute of Australia president Jacob Caine said with affordability becoming increasingly challenging, many homebuyers would be looking in areas that had previously not been first or even second on their list.
The suburb of Yarrabilba in the Logan South part of Queensland between Brisbane and the Gold Coast has homes like this four-bedroom offering that sold for $730,500 this month.
Victoria dominated the list, and homes like this two-bedroom unit in Reservoir, part of the Darebin municipality, recently sold for $635,000.
Mr Caine added that the locations highlighted by the Hotspotting report were not what had been historically considered blue chip — but as new families and generations moved in, homes would be upgraded and the suburbs would gentrify.
He agreed that a rise in demand for units could be driven by more than just affordability.
“In some areas of Australia crime has become a more significant focus and as a result people are gravitating towards homes offering additional security with that thought in mind,” Mr Caine said.
“Apartment buildings, by virtue of being multi-dwelling home sites, offer additional organic security as there are more people around to dissuade criminals from casing out a joint or committing crimes.”
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