How to pick a boom suburb during the coming year

During the local property market boom between 2005 and 2007, anyone who owned a property saw themselves achieve significant wealth creation.
Over the last two years, the fortunes of the real estate market has changed significantly. The difficulty in the current real estate market for property buyers, however, is to find a selective area that has the potential to boom.
Over the coming year there will still be opportunities for astute property buyers to achieve significant wealth creation in the Western Australian property market despite house prices becoming relatively stable.
Even in a more stable real estate market, there will be a number of suburbs which continue to achieve higher than average levels of capital growth. The main challenge for investors as well as first home buyers wanting to achieve high levels of capital growth is to find suburbs that are about to boom.
With experience this can be done and your search should start by identifying the truly undervalued properties. An undervalued house is not the one across the road that will cost $50,000 less than your place because it needs rewiring and a new roof.
The litmus test is sustainability. Almost any property, anywhere will increase in value in a rising market – as has been the case for most properties in Western Australia over recent years. However, only a small handful of peroperties locations will actually hold their value beyond the initial growth and heightened demand.
This capital growth should be the primary goal. The property should have the potential to grow in value in the short to medium term (for property, that is 3 to 7 years) and outstrip the wider market’s growth pattern.
Investors will begin to reap the rewards when they can distinguish between a “one hit wonder” and a true “sleeping beauty.” Certain factors have to be changed within the identified area, surrounding suburbs and wider marketplace.
One of the best ways to identify undervalued pockets is to watch which areas investors and first and second home buyers begin moving into, prices in the immediately adjoining prime areas go beyond their reach.
Another good tip is to find suburbs that have under performed compared to their long term average price growth rate. It is important to remember that house prices do not move in a uniform rate across the Perth metropolitan area and in regional areas.
Finally, home buyers should look for new infrastructure projects that might boost long term property values in a suburb. For example, the massive Northbridge Link project combined with the foreshore redevelopment should have a positive impact on the inner city real estate market.
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