I do not have IPs in any inner-city suburb because of the poor yields. Just received the Dec issue of the API, it lists the 10-year growth for every suburb. A quick glance revealed the blue chip suburbs do not necessarily outperform the outer suburbs. Take those suburbs in Melbourne for example, for the past 10-yr, annualised growth rate are : brighton 10.6%, sth yarra 8.0%, prahran 10.4 %, whereas in outer suburbs : boronia 10.7%, chadstone 13%, even noble park 11.4%. Obviously if you buy in the former suburbs a big chunk of your pay packet will go to prop up the -ve geared properties. Am I missing something here or can I believe the statistics ?
Hi ttman
I can’t speak about Melbourne but Inner and Near City Suburbs in Brisbane do outperform outlying suburbs. The yeilds are lower but the Capital Gains are higher.
Regards
Demkel
Inner city suburbs show greater increases in median prices than outer suburbs, but I can find no evidence that the cost of renovations are taken into account.
In Brisbane prime suburbs like Auchenflower and Bulimba have had spectacular growth over the last 10-20 years. But the houses of today are vastly different to the houses of 10-20 years ago, most have been extensively raised, extended, modernised and had a lot of money invested into them.
Just drive around the suburbs with the higher increases and you will see the work being undertaken.
Then again, figures in outer suburbs or poorer or run-down areas can be skewed if a new estate goes in, suddenly there are $350K houses in an area that previously had $260K-$300K houses. The suburb shows a leap in values, but that does not mean that individual houses have increased by that amount.
And even if these factors do not play a part, it is also a simple fact that the houses sold in one year are not the same properties that are sold the next year, even though a comparison is made.
Statistics are a basic guide only.
MargHi ttman,
I believe over a long period of time, inner city suburbs will offer better capital gains.
One important thing to consider is in a property downturn, you will find properties in inner city suburbs hold their values better. But you need to be careful about what kind of properties you buy. You need to buy within +/- 20% of the suburbs median price. If you buy an extremely expensive property then it will fall in value in a downturn.
Inner city suburb properties with (some) land component will definitely be long term winners.Regards
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
My 20 cents!
Medium prices seem to move first in the inner suburbs. This then trickles out to the outer suburbs.
Rental market seems to do the same.Exceptions will be noted in every case but i believe this to be generally correct.
Have fun! [biggrin]
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