When you’re buying a home to live in, it’s easy to make decisions on where you want to buy. But when you’re investing, buying at the right time in the right area can be tricky, yet it could also mean that you score a fantastic investment opportunity. So how do you spot the best suburbs to invest in?

If you invest in an area with strong suburb growth at the very beginning of an uptick, you could stand to benefit from high rental yields as well as long-term capital growth. The key is learning to recognise those key hotspot suburbs before they’re hot! Some experts feel that suburbs to watch should satisfy criteria such as being close to Sydney’s CBD, having a high walkability score, and having a good demand-supply ratio.

So, how do you learn to identify the best suburbs to invest in? The key to predicting suburb growth is to analyse the data and watch out for developing trends. But which data matters the most? Read on to find out!

1. Track property values

One of the most obvious places to look when you’re deciding on a new suburb is to track property values. Fluctuations in property prices can provide a good indication of longer-term trends, but they should by no means be your only indication of a suburb’s popularity

Property values should always be mapped against other suburbs as well as additional data to provide context. And, if you’re looking at a specific property, be sure to check data from nearby streets, as larger suburbs can vary quite dramatically in price.

2. Follow rental prices

When you’re looking for the best suburbs to invest in one of the key indicators will be rental prices. Property values could be sky-high, but if no one is looking to rent in the area, what’s the point in purchasing an investment property that you’re not willing to actually live in?

Rental prices and high rental yields are a great indication of high demand in an area. Rising rental yields are a good sign your chosen suburb has great potential as a property investment. If you can see rents increasing steadily over time in a specific suburb, you may have spotted an up-and-coming suburb!

3. Days on market (DOM)

The DOM of properties can provide some important clues about the best suburbs to invest in. Depending on the current market, if properties in a certain suburb are selling within 3-4 weeks, demand is likely high and you might want to jump on a bargain if you spot one in the area.

4. Check the local amenities, transport, and businesses

If you’re seriously considering buying in a suburb you think may have potential, make sure you check out the local amenities. Ideally, an up-and-coming suburb will have adequate local schools within walking distance, daycare centres, transport, thriving local businesses, shops, parks, and recreational areas to visit.

5. Watch out for new developments

If the area you’re considering doesn’t necessarily have lots of amenities now, perhaps they’re coming in the future. A great example of this in Sydney are areas like Green Square, Waterloo, and Barangaroo, which are slowly developing into full-scale lifestyle hubs as opposed to just working hubs. Check the upcoming developments in the local area to see what the future of that suburb could look like.

Keep in mind that data isn’t the be-all and end-all when it comes to predicting the best suburbs to invest in. You also need to analyse wider social movements, lifestyle trends, and working habits to properly assess a suburb’s potential.

For instance, Sydney’s inner-city CBD may be quieter now during lockdown, but when businesses open up again and international students return, suburbs like Darlinghurst, Surry Hills, and Zetland should see rents and capital long-term growth increase. Remember; property investment is a long-term game!

We have decades of experience working in the Sydney property market. Explore our property investment advice or sign up for regular property market advice here.

Tolga Ozer, Principal & LREA

Tolga Ozer, Principal & LREA

Hyde Park’s most highly acclaimed property expert, achieving record-breaking outcomes for owners and investors. Having become the most sought-after agency for Sydney’s inner suburbs and CBD, my team and I take pride in our ability to deliver outstanding results.

Get in touch

Find out what your home or investment property is worth in today’s market.