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Why low-end properties are a buy right now

Low-end properties offer Aussies a buying opportunity. Source: Getty

Lower-end properties across Sydney and Melbourne are offering Aussies a great buying opportunity right now, new research has revealed. 

Taking a long-term outlook, many lower-end areas like Geelong in Victoria and Sydney’s western suburbs were forecasted for gentrification – and therefore strong price increases, according to RiskWise’s latest data.

“Our nationwide research actually found gentrifying suburbs with high crime typically deliver strong price growth and outperform the local benchmark,” RiskWise chief Doron Peleg said.

“We found affordable high-crime areas with significant gentrification are likely to produce strong price growth, particularly when dwelling prices in the inner and middle rings are severely unaffordable.”

Provided there was strong population growth, the high-danger areas of New York City and London still saw an increase in popularity and therefore property prices, particularly given the severe unaffordability of property throughout those cities, Peleg said.

“In fact, over the long term many low-end areas outperform the top end,” he said.

According to real estate agency, Upside, five Sydney suburbs in particular will benefit from future development and urban renewal – and see their prices boom simultaneously.

These areas are Green Square, Badgerys Creek, Brookvale, Auburn and Eveleigh.

High-end properties more sensitive to downturns

Following the Reserve Bank of Australia’s rate cuts, some loosening of credit restrictions and significant improvement in buyer confidence, the housing market has seen a strong upturn. 

But while they’re recovering well, high-end properties are far more sensitive to credit restrictions and investor activity than lower-end ones, Peleg said.

“That's why high-end properties were impacted dramatically during the downturn but also bounced back dramatically when reversing the negative factors, as we are seeing in prestige areas of Sydney and Melbourne,” he said.

“Lower-end properties are less subject to credit restrictions and investor activity which actually make them a great buying opportunity. In fact, in some cases areas, such as Geelong, even benefited from the lending restrictions as buyers looked for more affordable options.”

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