Strength of inner suburbs a myth: expert

Font size :

Whether it's Sydney, Brisbane or Melbourne, many property experts claim that the closest suburbs to the capital city centres of Australia are the best investments.

Despite the higher property prices, most new residents to these cities want to live as close as they can to the perks of city life and the infrastructure that goes along with it, including cheaper petrol costs, these experts reckon.

But another leading property forecaster, Terry Ryder, said recently that these claims are baseless and wrong. The cheaper, outer-lying suburbs turn out the best growth for investors, Ryder said.

"There is no truth at all to the claim that the 'good suburbs' close to the city are the best and safest investments and are better at resisting downtowns," Ryder said. "In fact, the figures prove it wrong."

In making his own claim, Ryder used Brisbane as an example, using Real Estate Institute of Queensland (REIQ) median price figures over the past five years.

Of 130 suburbs in the Brisbane City Council area, 29 had doubled their value by experiencing price growth above 100% during the five years to mid-2008. Of these 29 high growth suburbs, 20 had median prices below the Brisbane average with most priced in the $300,000s and a couple even lower than that, Ryder said.

The top three growth performers - Darra (201% growth), Carole Park (195% growth) and Inala (175% growth) - are "definitely not considered prime locations," said Ryder. All three are about 20km, or 30 minutes' drive, from the city centre. Only Darra, at $325,000, had a median price above $300,000.

In comparison, some of Brisbane's most expensive suburbs were poor performers over the same period, said Ryder.

"The facts are that in any capital city, the expensive inner suburbs are poor long-term performers in terms of capital growth," said Ryder. "Above all, their price patterns are volatile rollercoaster rides that can produce sharp declines, contrary to popular claims that they always hold their value."

Ryder cited statistics from his own property investment website,, showing many investors were still under the impression that the inner suburbs performed best, though.

In response to the question of where it was best to buy for long-term capital growth, 40% said inner-city locations, 26% said sea change locations, 12% said regional centres, 11% said mining towns and 11% said outer suburbs.

"The myth is actually good news for those investors that can see past the hype," said Ryder. "Most buyers can't afford the expensive inner-city or waterfront suburbs, but who cares? The less favoured suburbs are cheaper, have higher income yields, and provide higher capital growth. It's a win-win situation."

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Thursday, Sep 21, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
  • How much do you want to borrow?
  • How much deposit do you have?
  • How much is your house worth?
  • How much do you still owe on your mortgage?
  • What type of mortgage do you have?

  • How much is your new home?
  • How much do you want to borrow?
  • How soon do you want a mortgage?
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords