14 cheap suburbs that could take off in 2012

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Jeremy Shepherd, director of research for Redwerks, and a keen property investor with a portfolio of 16 properties, believes that by looking at the demand to supply ratio, or DSR, investors can gauge a market’s potential for capital growth. 

The DSR is a measure of the imbalance between demand and supply for a property market in Australia. A high DSR represents a greater statistical likelihood of immediate capital growth compared to a low DSR. 

“Comparing the entire Australian market of DSR scores is a great way to short-list potential hotspots,” he says. “The data upon which the DSR is based can also be used to locate markets for investors looking for something in particular.” 

As an example, he has sourced 14 cheap suburbs from DSR data that could be poised for high capital growth this year, applying a few restrictions: 

“Some investors don’t want to buy in areas they have no prior knowledge of, so I’ve included the top markets in each state, rather than the top markets in Australia. This is in case one state dominated.” 

He adds that only markets with a decent level of stock on market were considered. This is because he believes that if the supply of stock on market is too low, it is difficult to find properties to buy. All markets in the table below had at least seven properties for sale at the time of writing. 

The results are in the table below:

 

Cheap suburbs with high potential

 

State

Post code

Locality

Dwelling type

Typical value

DSR

ACT

2615

CHARNWOOD

Houses

$396,500

35

ACT

2617

BELCONNEN

Units 

$395,000

33

NSW

2230

WOOLOOWARE 

Units

$345,000

36

NSW

2145

PENDLE HILL

Units

$313,000

33

QLD

4064

PADDINGTON 

Units 

$430,000

25

QLD

4717

BLACKWATER 

Houses

$395,000

26

SA

5161

OLD REYNELLA     

Houses

$329,000

29

SA

5163

HUNTFIELD HEIGHTS

Houses

$271,000

31

TAS

7016

RISDON VALE

Houses

$168,500

26

WA

6147

LANGFORD 

Houses

$333,000

33

QLD

4054

ARANA HILLS

Houses

$395,500

25

WA

6147

LANGFORD 

Houses

$333,000

33

WA

6108

THORNLIE 

Houses

$374,500

28

WA

6064

KOONDOOLA

Houses

$294,000

30

 Source: www.DSRscore.com.au

 These kind of lists should only be used as a starting point of further due diligence. As with all statistics, be sure to apply some sanity check to the data by performing your own fundamental research.

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Top Suburbs : werribee , leumeah , eagle vale , scarborough , rockville

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Comments
  • Craig says on 01/11/2013 06:06:21 PM

    Koondoola has amazing value considering tits location and it has improved dramatically over last couple of years. This is why it has had 18% growth over the last year! You can't go wrong with buying an investment in Koondoola!

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