Buying in cheap suburbs can have big rewards

10 Jun 2013| Posted by: Geoff Baldwin

Most home buyers would love to be able to afford a home in a premium area however if your budget depicts that you can only afford to buy in a cheaper suburb there are still some big upsides according to RE/MAX WA Managing Director, Geoff Baldwin. “Over my long career in real estate I've often heard buyers say that they are only buying in a particular suburb because that's all they can afford but our current market is demonstrating why cheap is not always bad", Mr Baldwin said. “A study of recent sales will show that significantly more properties are selling in the more affordable suburbs, they are selling faster and most importantly, on average, they have outperformed all of the dearer suburbs as the market recovers. “Historically, cheaper suburbs are the first to recover in any economic cycle plus, for investors, the percentage rental returns when compared to sales prices are much higher than in dearer suburbs. “As an example, you can still buy homes in Perth under $350,000 with rental returns above 5% whereas in the more expensive suburbs it can get down to as low as 3%. “Wanneroo, Balga, Girrawheen, Thornlie, Armadale, Mandurah and regionally, Bunbury are just some of the areas still offering great value but the current window of opportunity is closing as stock reduces and pressure on prices increases. “Regardless of whether you are buying to occupy or as an investor buying in the more affordable areas is a surer stepping stone to gaining substantial capital and/or ongoing returns", Mr Baldwin said.