ORIGINAL BLOG: Investors are always looking for the next ‘hot spot’ and while many people may have missed the boat on Sydney’s inner city areas, there are still affordable suburbs further out that are showing the early signs of gentrification.
Gentrification refers to the migration of higher income households to lower income neighbourhoods where the renovation of rundown commercial and residential property ultimately changes the character and physical appearance of the area.
For investors and home buyers, the possibility of gentrification of an area is seen as a smart long-term decision offering the ability to buy into an affordable area that could offer capital growth over time.
However, gentrification also has its critics and is seen as being particularly damaging to the diversity and the unique character of an area.
In addition it is often blamed for pushing out the elderly and less affluent residents of a neighbourhood – usually in public housing – because of increasing property and rental prices. The the controversial closure of the Sirius apartments in the Rocks is a timely example.
Redfern’s gentrification in recent years has seen property prices and rents soar, with the median rent now at $830 a week for a house, and $580 for a unit. To illustrate how much it has changed the average house in Redfern cost just $592,000 in 2007 compared to today’s hefty $1.325 million price tag, according to figures from realestate.com.au.1
Where people are buying in Sydney
Whether people are looking for a home that needs only a small amount of work, a full renovation or even a demolition/rebuild, it is seen as important that they identify an area during the early stages of gentrification so they can maximise their investment.
However, predicting the next hot spot is never easy and an analysis of the real-estate pages will reveal umpteen widely different suggestions across Sydney.
It is often reported that the key is to get in early and be prepared to wait it out as gentrification is never an overnight process. For example, the inner Western suburbs of Marrickville, St Peters and Dulwich Hill were being touted as great investments at least 15 years ago but have only more recently begun feeling the flow-on effect from the successful gentrification of Newtown.
‘Cultural gentrification’ is another trend happening across Sydney. Following in the footsteps of Leichardt – our own Little Italy – cultural gentrification is also happening in areas such as Chatswood and Hurstville with its growing Chinese populations. Harris Park, next door to Parramatta and known by locals as ‘PIND’ – Little India – is another area often named for its growth and investment potential.
The Greater Sydney Commission chairwoman, Lucy Turnbull has identified Granville, Dundas, Telopea and Carlingford – all less than 15 mins by train or road to Parramatta – as among key residential areas which will benefit from the ambitious development plans being cited for Western Sydney.2
She has also said that high levels of population growth are expected around other major hubs, such as Blacktown.2
Identifying signs of gentrification
People will often consider purchasing or investing in properties in surrounding suburbs that are experiencing the ripple effect of gentrification.
There are reported signs that may indicate that suburbs are on the rise and these include:
- a rise in median property prices
- plenty of rundown housing
- concentrations of new housing and renovations
- local announcements like rezonings
- government investments
- community infrastructure, e.g. new residential communities, expansion or redevelopment of hospitals, schools
- new transport infrastructure
- schools with good academic results
- newly opened cafes and stores
- changing demographics towards a more professional crowd
- Council statistics on increasing population and incomes, decreasing unemployment and improving levels of education among residents
- Council and Chamber of Commerce activity and news
- locations close to beaches, waterways and parks.