Investment Strategies for Perth’s Emerging Suburbs

Every city has emerging suburbs, but Perth may possibly take the cake in terms of volume and growth potential. Perth has over 10 suburbs which grew 25% in house value last year. Two of them, Bullsbrook and Woodbridge, grew 33.5% and 33.1%, respectively.

We’d say it’s a fairly smart move to make the most of Perth’s emerging suburbs. That’s why the experts at Patrick Leo outline some key investment strategies for finding and investing in these high-growth-potential suburbs:

How to find emerging suburbs in Perth

Emerging suburbs are areas which are expected to grow in population and in home price value in the future. There are several factors to look for which are strong indicators of an emerging suburb. These include:

• Demographics – look for a growing number of younger residents with good incomes. This is a tell-tale sign that a suburb is about to grow.

• Businesses – if a new supermarket, retailers, cafes and pubs have sprung up in the area, it’s another sign of imminent growth.

• Houses – if there are a number of new or renovated houses in the area, it could be soon expected to grow.

Strategy #1: capital growth

Emerging suburbs are often identified as potential growth suburbs. Investing for capital growth – growth of value of the property – is a great strategy for emerging suburbs. This can give you excellent long-term or even short-term gains on property value. If we look at popular beachside suburb Scarborough, we can see excellent medium-term growth, going from a median house price of $725,000 in 2019 to over $1 million in 2024.

For short-term capital growth, Byron Bay is one of Australia’s most extreme cases – where house prices were around $1.4mil in 2020, shooting all the way up to $3.2mil in 2022. That being said, Byron Bay was quite a unique case for growth, with cultural and alternative lifestyle factors having a strong impact on property value growth.

Strategy #2: negative gearing

Negative gearing involves buying a property in a high capital growth suburb in which the net rental return is lower than the cost of holding the property – meaning that you’re making a cash flow loss.

This doesn’t sound too smart at first, but what this does is allow you to deduct the losses of the property from your payable tax, reducing your tax while your property gains in capital growth. This strategy is generally best for high-income earners who would otherwise lose a significant portion of their earnings in tax.

With the right guidance, you’ll be able to pick the perfect emerging suburb and find the best investment property for your needs. Patrick Leo is your team of property-buying professionals, with skilled researchers and negotiators to help you secure a property that facilitates your financial goals. Our team sits down with you, learns about your position and your goals and finds the best property for your needs. Get in touch with Patrick Leo today.