This is
where most homeowners and many investors look because that’s where they can
afford to buy.
However,
sometimes investors buy in these suburbs because they are "advised” to buy at
the cheaper end of the market.
There is no
doubt some affordable areas make good investment locations, especially those
that benefit from the ripple effect from adjoining aspirational suburbs and
eventually become aspirational suburbs themselves.
On the
other hand, most locations at the affordable end of the property market
underperform with regard to long-term capital growth and rental growth because
many of the owners are young families who have stretched themselves to their
financial limits and are often only a week or two weeks away from being broke.
Similarly,
the tenants who rent in these locations live there because that’s all they can
afford and are unlikely to be able to pay you increasing rents over time since
they are also only one or two weeks away from being broke.
As an
investor I would steer clear of these affordable locations – most of these will
never gentrify in your lifetime and they will underperform with regard to
rental growth and capital growth.
Often
owning properties in these locations can end up being more trouble than they’re
worth.
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Jason Gwerder
Saturday, 2 December 2023
