Property investors are always on the lookout for telltale signs of an area that will eventually take off in the hope that they can buy cheaply and reap the benefits of an increase in property prices. There are certain indications that a suburb or town may boom, such as new facilities or important infrastructure developments such as a railway or freeway, but nothing is for certain.
That said, the REIA has a "hot spot" checklist that may be used to pick the next boom area.
· to see whether demand, for whatever reason, exceeds or apparently exceeds supply;
· for low prices that are expected to rise in the near future - and its surrounds to see if neighbouring areas are experiencing good capital growth;
· for positive developments happening in the area such an arterial road to the city that will impact positively on capital gains.
Bernard Salt, KPMG partner and leading commentator on demographic trends, says investors should look for railways, bypasses or tunnels that link attractive "lifestyle" towns to bigger cities or places of work.
"Climate, convenience and lifestyle are the overriding factors driving property hot spots," Salt says. "But if you can add another factor - like infrastructure - it will give a burst of appeal because if the lifestyle equation of the town changes overnight it can have a rapid effect on property values."
Examples include the Heysen Tunnel, which made Mount Barker an appealing tree-change town for Adelaide residents. Similarly the extension of the railway from Brisbane to Robina had an immediate impact on property prices behind the Gold Coast.
"Give Australians half a chance and they take the lifestyle option every time," Salt says, citing "a road which makes it possible brings that chance closer".
He predicts the completion in 2009 of the Western Bypass in Victoria, which will eliminate 30 sets of traffic lights through Geelong, will open up the west coast of Victoria from Torquay to Lorne.
Similarly, the southern extension of the Pacific Motorway south of Byron Bay in NSW will push prices up in Ballina and Yamba.
"Places that will continue to improve in value over coming years are in places that capture the lifestyle and mining boom," Salt says.
He adds that demand for inner-city living is showing no signs of slowing and suggests "anything within five kilometres of the GPO in Sydney, Melbourne and Brisbane".
"There are 6000-7000 people moving into all these locations a year. Even with new stock coming on line the demand for inner-city living is still rising."
