It’s the people who live in – and want to live in – a suburb who determine property prices.
Before purchasing in a suburb, stop to people watch. There are specific Ages to watch for when considering a suburb’s future $ price growth prospects… This graph shows the Age of Melbourne’s population: 6% of us are 0-4 years old, 6% 5-9 years old, etc.
Coloured in blue are those ages statistically proven to drive future $ house price growth. Suburbs with a high proportion of inhabitants aged 20-44 AND a high proportion of inhabitants aged 70+ have significantly outperformed the broader Melbourne market over the last 5 years. We call these suburbs ‘Newly Wed & Nearly Dead’. (Not the most sensitive label, but I’m not terribly PC).
Of Melbourne’s 400+ suburbs, we’ve classified just 30 as NWND. This graph shows how $ house prices have grown in these suburbs compared to others.
Over the last 5 years, median $ house prices in NWND suburbs are up 51.3% – a full one third higher than other suburbs’ with more typical age mixes. So why on earth do these suburbs grow so much more?!
It’s pretty logical when you think about it…
People aged 70+ are generally interested in down-sizing from the large (often tired, land-heavy) family homes that they’ve owned for decades. Those homes on larger blocks are often snapped up by developers, who turn one old home into multiple brand new houses/townhouses that appeal to younger buyers (aged, say 20-44) who are willing to pay a premium for modern, open plan homes.
And those properties not suitable for development are overwhelmingly purchased by ambitious, energetic young married couples who renovate/extend, and collectively contribute to suburb gentrification.
Put simply, old properties turn into new properties – where oldies sell up and young folk move in. Importantly, these type of suburbs are spread all over Melbourne, with a diverse range of $ prices.
We’ve studied all types of other demographics and socio-economics.
But if you’re not into people watching, and spreadsheets of data don’t appeal, simply look for gentrification. Are there lots of new developments, renovations, and/or new builds going on? If not, pause to think about what that could mean for future $ price growth.