Gentrification is a process where a neighbourhood or an area is improved and redeveloped, leading to an increase in property values and slow displacement of older long-term residents due to rising housing costs.

This process often starts with the influx of middle or upper-class residents, new businesses, and amenities, which attract further investment and development.

It often happens in inner to middle ring suburbs which were initially overlooked, but have now become in higher demand as prices move out of reach in nearby suburbs.

You will see tired old warehouses or run-down shops in surrounding streets, starting to be given a new lease on life.

They may be transformed into a trendy café, microbrewery, or maybe a new hairdresser or bakery.

The demographics also start to change as the older retirees or social housing tenants start to move on and busy young professionals take their place.

As a result, we also see the average income for the location shift up a gear as this higher-income earning demographic moves in.

Gentrification can happen on a street level too.

The new demographic does not want to live in old, tired, run-down properties, so they start to make changes.

They renovate or knock down and rebuild to meet their appetite for a more contemporary home and to match the ever-changing, trendier landscape while developers transform the existing property into more modern and desirable housing.

Gentrification is a positive factor for property investment because it brings economic benefits and improvements to an area which in turn creates more demand and therefore attracts higher prices for local properties.

Moving forward, we’re likely to experience a period of lower general capital growth, so I would recommend investing in areas that are gentrifying.

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Jason Gwerder
Friday, 17 November 2023

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