Home' API Magazine : August 2014 Contents 22
API AUGUST 2014
AUGUST 2014 API
It’s a question often asked by investors,
is it better to negatively gear in a blue-
chip area, or purchase something more
affordable, but perhaps with less chance
of capital growth, in a regional location?
This debate goes around and around
in circles but one thing’s for sure when
it comes to investing – all locations, no
matter what part of Australia – have
potential for capital growth and solid
returns if the fundamentals stack up.
There’s probably more reason than ever
to debate the blue-chip versus the blue
sky of regional towns strategy right now.
Over the past year, capital cities have
boomed, leaving regional areas behind.
But is there any more growth in them
to come? Or is it time to focus on the
outskirts of the cities and perhaps venture
back to tourism destinations?
Onthehouse.com.au and Residex have
come up with the top 10 hotspots for both
houses and units in blue-chip areas, as
well as regional locations.
And Onethehouse.com.au and Residex
founder John Edwards says there are pros
and cons for both.
Despite Sydney experiencing a massive
property boom in 2013, and other capital
cities also showing solid gains, Edwards
believes there’s still more room for growth
this year and the blue-chip locations will
outperform other city suburbs over the
next five years.
“ When you look at the suburbs in the
(blue-chip) list, you can see that they’re
in the upper socio-economic suburbs,”
“ T he blue-chip suburbs are undervalued
at the moment. They’ve lost their value
compared to the rest of the suburbs in
cities. I suspect that the upper socio-
economic group is more likely to be highly
educated and more aware of what’s going
on. They’re more likely to have been hurt
by the GFC. ”
As the economy starts to improve,
homebuyers in this area will start to feel
more confident and perhaps upgrade.
So while the ’burbs had a strong year in
2013, it’s those areas people aspire to live
in that should really outperform in the
future, Edwards says.
¿ BLUE-CHIP IS BEST
Not everyone can afford a property with
a million dollar price tag, but Edwards
believes investors who can purchase in
aspiring suburbs will do well over the next
five years. Sydney suburbs Bellevue Hill,
Rose Bay and Mosman top the blue-chip
hotspot list for homes, while Malvern and
Elwood are also predicted to outperform
Similarly, the riverside suburbs of
Bulimba and New Farm in Brisbane are
expected to shine in the sunshine state.
If you don’t have the cash for a prized
pad in one of the country’s best suburbs,
consider the more affordable, but still
competitive, unit market.
That’s Elwood, St Kilda and Richmond in
Victoria, or North Bondi and Milsons Point
Subiaco, Claremont and West Perth in
Western Australia take out three hotspot
locations in the unit list, while West End
and New Farm in Brisbane round out
the numbers for Queensland. They’re
all blue-chip locations that are safe bets
for your retirement nest egg, according
“ T hese are suburbs where there’s
limited supply,” Edwards explains.
“ It’s still a high cost to get into the unit
market but they’re in good positions.
You can’t redevelop these areas or create
He adds lots of the blue-chip unit
markets have older style blocks. They’re
built well, usually larger in size and
considered ‘boutique’ .
“ To infill these areas, it’s very difficult.
The blue-chip (unit) suburbs in Melbourne
aren’t like the rest of the city where
there’s oversupply. ”
Units in New Farm and West End
in Brisbane are still quite affordable,
Edwards adds. These suburbs might not
‘boom’ but they should at least have an
annual growth rate of four per cent over
the next few years.
“ Brisbane overall is the suburb I’m most
comfortable with, in terms of it doing
well,” he says.
“ I think it’s undervalued, relative to
other cities in Australia. It should do
well because of its economic future
credentials. Overall, I think Brisbane is
probably where the best growth will occur
over the next decade.”
VERSUS BLUE SKY
Is buying a blue-chip inner city pad better than the blue sky of a regional property?
API discovers why both have their merits.
FEATURE // CITY VS COUNTRY
Links Archive July 2014 September 2014 Navigation Previous Page Next Page