Bargain suburbs

  • Reporter: Gavin Alder
  • Broadcast Date: September 02, 2009

Now that the economic storm clouds are clearing, real estate circles insist it's clear skies ahead.

Performing well are the areas targeting the first home buyer market, but that's about to change. The next surge is about to hit those looking to upgrade.

That means new areas closer to the cities have been identified as bargain suburbs.

So, if you're in the market for a property, how do you go about finding a bargain suburb?

The experts say the best idea is to compare its median price against the median prices of surrounding suburbs - if yours is much lower, chances are you can find a bargain.

Australian Property Investor Magazine's Nicole Navarro: "A good first sight is to look at the median price of one suburb, compare it to the surrounding suburbs and that's where we are finding you get bargain properties."

Nicole has nominated Rockdale, 12 kilometres south east of Sydney's CBD with a median price of around $520,000.

"In suburbs surrounding that you'd be looking well above that into the 600's or 700's," Nicole said.

In Melbourne, Nicole suggests Kensington. It's within 5 kilometres of the CBD with a median price of $516,000.

"It has a real village atmosphere, just two train stops into the city."

In Adelaide a bargain might be found in Black Forest which has a median house price of $460,000; while in Perth looking around Bassandean, median price $450,000, might prove profitable.

Lutana, median price just over $250,000, is Hobart's bargain suburb and Fairfield is Brisbane's, with a median price of $580,000.

Major infrastructure is the next thing to look for to identify a suburb where bargains can be found.

But be careful not to confuse a discounted property for a bargain - they are two very different things.

"Bargain property is essentially property that has been undervalued in comparison to other properties in the area or other suburbs surrounding it. If you see a really big discount in a property, you really do need to know why, you need to determine what you're buying is not a lemon," Nicole said.

And while the Reserve Bank decided yesterday to keep interest where they are, they will eventually climb.

The Treasurer, Wayne Swann, is urging caution.

"The official cash rate is at an emergency low and as the Governor has said, it is an emergency low and at some time it will rise," Mr. Swann said.

How high they can go is anyone's guess, but the smart money is that the Reserve Bank will keep a tight rein and there's no need for panic when they start rising.