We’ve all drooled over those dinner party stories of someone buying a house in a bargain area and selling for a massive profit when that area magically becomes tres chic. So how do you pick the next hot suburb? There are no definitive rules, but there are some tell-tale signs to watch out for.
Start at the centre of town and work your way out: the nearer to town, the more likely it is to go up in value, because it’s near workplaces and amenities. Suburbs that sit alongside pricier areas will slowly increase in value, catching the reflected glory, as it were, of their upmarket neighbours. For example, in Auckland, Grey Lynn and Westmere have risen steadily in value primarily because they are the next suburb out after uber-trendy Ponsonby. They also offer easy commuting into the city.
Find out whether any developments are planned for each area: a new shopping centre or apartment development, for example, or new road configuration. Will the development make the area a more or less attractive place to live?
A sudden increase in the number of residences available – such as a new apartment block – will generally have a dampening effect on prices in an area; more jobs – thanks to a new or extended tertiary institute, or a big shopping centre – will usually increase housing demand and, therefore, prices. New public transport facilities, such as an upgraded train station or a new park-and-ride facility, will also increase demand for an area, because of the convenience factor.
Funky new cafes are often a good sign that things are starting to take off in a particular area – so long as they’re well-patronised. Similarly, new bookshops or a sudden proliferation of real estate offices are good indications that an area is on the up-and-up.
Keep an eye on the arty, creative types in the cities. These are the opinion formers. Advertising agency people, art directors, copywriters, photographers and PR people make brands popular for a living. It’s their business to mould people’s opinions and make products desirable. They can’t help doing the same with their neighbourhoods.
The trick is to find the area at the same time as the savvy brand merchants start buying up large and installing eight-burner gas ovens.
This is an extract from The Streetwise Home Buyer - the step-by-step guide to smart home buying in New Zealand.