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Tuesday, November 22, 2016

Is buying property next to a wealthy suburb a good investment

Nov 22 2016 at 11:01 AM Updated Nov 22 2016 at 5:50 PM Save article Print License article Is buying property next to a wealthy suburb a good investment? Share via Email Share on Google Plus Post on facebook wall Share on twitter Post to Linkedin Share on Reddit Play 0:00 / 1:53 Fullscreen Mute The charm of the Queenslander Nicola McDougall dinkus by Nicola McDougall A common investment strategy is to buy next door to a fancy, or blue-chip, suburb and ride on its profit coat-tails. But does such a simple strategy work - and which south-east Queensland suburbs offer the best prospects for neighbourly love if it does? The ripple-effect, or bridesmaid investment strategy, involves a belief that capital growth ripples out from the most desirable suburbs to the lesser locations in proximity. But while being situated next to a blue-chip suburb with a trendy cafe lifestyle or one with access to water is never a bad thing, it doesn't mean the neighbouring suburb will necessarily produce the same stellar results. Buying property next to a fancy suburb may not always be the way to go. Buying property next to a fancy suburb may not always be the way to go. Glenn Hunt "I understand where people are coming from, but they're totally neglecting the fact that there's probably [a further] 90 per cent of the country, in a completely different city, and they're not even considering those [suburbs]," Propertyology buyers' agent and market analyst, Simon Pressley, says. "They're just focusing on features and benefits of suburbs and it's sort of pot-luck that the city that they live in happens to have a really strong sustainable economy for years to come. That's the most important part of any market." Homebuyers and investors need to consider the specifics of each location and not just rely on its proximity to blue-chip suburbs. This is especially true if the lesser neighbouring suburbs are industrial, flood-prone or too close to the airport, which reduces buyer demand and are situations not likely to change any time soon. Pressley doesn't discount the strategy entirely, but the areas must also have other economic fundamentals to underpin future performance, including affordability. In south-east Queensland, his picks for the best opportunities that also happen to be close to more desirable suburbs include Lutwyche, Wooloowin, Geebung, Kedron, Labrador and Caloundra. According to Domain Group data for the six months to September, the median house price in Lutwyche was $751,000 and in Wooloowin it was $788,000. Geebung recorded a median house price of $519,500 and Kedron was $635,000. "Sunshine Coast renovators might consider older-style properties at Caloundra," Pressley said. "The new Kawana Hospital will be a major employment node and while there is significant new housing development in the vicinity they are further away from established cafe and retail strips. "Labrador's demographic has changed with the improvements in transport infrastructure and major retail improvements at Helensvale and Coomera. It's closer to the beach and more affordable." For the six months to September, Caloundra recorded a median house price of $535,000 and Labrador's was $430,500, according to the Domain Group data. This story first appeared at Domain. Read more: http://www.afr.com/real-estate/residential/is-buying-property-next-to-a-wealthy-suburb-a-good-investment-20161121-gsukqs?&utm_source=social&utm_medium=twitter&utm_campaign=nc&eid=socialn:twi-14omn0055-optim-nnn:nonpaid-27/06/2014-social_traffic-all-organicpost-nnn-afr-o&campaign_code=nocode&promote_channel=social_twitter#ixzz4QjdGYTN1 Follow us: @FinancialReview on Twitter | financialreview on Facebook

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