Gentrification: How to spot the next boom suburb!

Gentrification is the movement of affluent residents into an area and the changes that occur due to the influx of wealth. Most investors know that if they purchase a property right before a shift begins in the suburb they have hit the jackpot, the only problem is knowing how to identify one before it happens.

The signs of gentrification usually include the construction of modern infrastructure, greater employment opportunities and population growth. Combined these increase the desirability of a suburb, which ultimately drives up property prices.

There are some common signs to look out for to recognise such locations. The first indicator is if anyone, government or business, is willing to spend sizeable money in the area. For example, if a shopping centre is being built or local amenities are being upgraded then it is likely benefits will onflow to the rest of the neighbourhood and that possibly more will follow. Check out the local council’s website to find out what is planned.

There are online resources which detail the demographics of a suburb such as various real estate websites. Take advantage of these to identify if the local makeup is changing at all. Some suggestions to research are if incomes are increasing, unemployment is decreasing or the level of education among residents is improving.

One example of a suburb where gentrification occurred is East Perth. It used to be an industrial area full of factory buildings, a power plant and a railway yard. It has now transformed to be made up of luxury apartments, high-end eating establishments and recreational areas to make it one of the most expensive suburbs in the state.

While an area may seem undesirable now, look a few years into the future. If there are big developments planned or greater employment opportunities available then there is the potential for gentrification. So don’t wait until everyone has a nicer car and bigger house, plant your seed now and watch your investment grow!

For help in financing your investment speak to an expert today on 08 9242 3300 today.