What makes a suburb good for property investment?: Four things to remember

1. Job growth

The mantra “Buy within 10 kilometres of the central business district” has remained for many years—for good reason. Property investors must be looking for suburbs near job pistons when choosing a location for their next investment property.

Mr Salt says the ideal distance is about 10 kilometres from the central business district of Sydney and Melbourne, which are two of the most powerful job pistons in Australia, and only about five kilometres away from succeeding prime locations, such as Parramatta, Penrith, Campbelltown, and Liverpool.

“Look at how many jobs are found within the Sydney CBD? It might be like 270,000. How many were there five years ago? 265,000—it's increased by 5,000, that's okay because it hasn't dropped, it’s still growing.

“But if you go to the Northwest part of Sydney, it might have been 30,000 jobs five years ago, and there's 50,000 jobs now. That has value to an investor because it shows that there's another 20,000 people coming to work in that location.

2. New infrastructure

Mr Salt says the transformation brought about by new roads, new bridges, and new transport systems can positively impact a suburb and, therefore, the investments situated in the area.

When the Heysen Tunnel in South Australia was opened in the early 2000s, for example, he says people suddenly can go from Mount Barker to Adelaide in 20 minutes—a stark contrast from 40 minutes worth of tough driving. This change immediately brought positive impact on Mount Barker.

“It just changes perception. The model of life suddenly becomes easier. Then, add the intrinsic value of this absolutely gorgeous community up there—it’s beautiful.”

He said a number of big infrastructure builds, or those under construction, will most definitely change the value of properties in the area - and often in a positive way.

3. Accessibility

Mr Salt says many people are looking to live in properties located in areas which are near schools, workplaces, and other establishments that provide their basic needs.

"While it’s impossible to cram all real estate assets in one location, good transport systems make it possible to go from one place to another in only over a short period of time.

"[Around the country] North Melbourne, Richmond, and North Sydney, for instance, are the convergence zones of various railway lines.

“Where railway lines converge into a central place before going into the CBD, hang around that central place. Because jobs and workers and consultants and advertising people will want office space around there." 

4. ‘Environmental amenities’

Simply put, Mr Salt says, a good suburb is a pretty suburb.

“No one tree-changes to the flat wheat belt. It's got to be pretty,” he said.

He added that while it’s not an absolute necessity, environmental amenities along with other interesting and unique sights do attract more buyers or tenants in a particular area.

“You want a historic main street with verandas, the whole picture post-card type thing.

“The absolute pinnacle, the maraschino cherry on top, is when a big-rate celebrity from the 1980s has retired there. I always feel that it starts with jobs, extends into existing or planned infrastructure, and then [you] look for [cultural] transformation—that is where you start to see gentrification,” Bernard concluded.

Tune in to Bernard Salt’s episode on The Smart Property Investment Show to know more about the realities of investing in Australian property, where you should be channelling your dollars, and how our markets will develop in the future.