If you’re an investor with tight loan serviceability, prepare for good news. We reveal 25 markets poised to have the sort of capital growth to make you wealthy in the long run, while still having enough cash flow to make the banks your new best friends.
How do you know a market is poised for capital growth? It's a million dollar question, and one that, according to Redwerks research director Jeremy Sheppard, can be answered with two words: supply and demand.
Sheppard says that any market where the demand for properties far outweighs the supply of properties available is more than likely going to experience price increases. He says this is because supply and demand is a fundamental driver of price increases across human civilisation. If there is a large pool of buyers hoping to get into an area, but a limited number of properties available, buyers will start to pay a premium for those properties that are on sale. The result will be that prices go up.
Recognising this, Sheppard has developed the DSR score, a way to measure which markets have a large imbalance between supply and demand. The score is significant because a high score represents a market that stacks up in terms of supply and demand.
The DSR takes into account the average number of days that properties are on the market, the level of discounts that occur in an area and if there is a high or low proportion of renters there.
Other factors that sway a DSR score include the amount of properties on the market, rental yields, auction clearance rates, vacancy rates and the level of online search interest.
The suburbs
Knowing this, Your Investment Property magazine has compiled a list of 25 markets that have very good DSR scores (all above 30), but with an added benefit: they represent markets with reasonably high rental yields.
In other words, each of the suburbs below represents a market where demand currently outstrips the supply of properties on the market and where rental returns are excellent.
Suburbs with good capital growth prospects and cash flow:
| POST CODE | SUBURB | TYPE | PRICE | VACANCY RATE | YIELD | DSR SCORE | |
| NSW | 2776 | FAULCONBRIDGE | H | $329,000 | 1.46% | 8.47% | 31 |
| NSW | 2304 | WARABROOK | H | $292,500 | 0.56% | 7.92% | 31 |
| NSW | 2880 | BROKEN HILL | H | $186,000 | 0.00% | 7.20% | 30 |
| NSW | 2502 | WARRAWONG | H | $265,000 | 1.23% | 7.11% | 31 |
| NSW | 2146 | TOONGABBIE | U | $312,000 | 0.97% | 6.59% | 30 |
| NSW | 2039 | ROZELLE | U | $544,500 | 1.86% | 6.26% | 30 |
| NSW | 2043 | ERSKINEVILLE | U | $535,500 | 1.00% | 6.13% | 32 |
| QLD | 4720 | EMERALD | U | $307,500 | 0.11% | 7.92% | 31 |
| QLD | 4751 | WALKERSTON | H | $390,000 | 0.95% | 7.65% | 31 |
| QLD | 4730 | LONGREACH | H | $445,000 | 1.30% | 6.83% | 30 |
| VIC | 3331 | BANNOCKBURN | H | $434,275 | 0.95% | 7.59% | 30 |
| VIC | 3219 | ST ALBANS PARK | U | $238,500 | 1.25% | 6.00% | 30 |
| WA | 6054 | EDEN HILL | H | $360,000 | 0.55% | 7.69% | 34 |
| WA | 6430 | LAMINGTON | H | $303,000 | 0.98% | 7.24% | 30 |
| WA | 6158 | EAST FREMANTLE | U | $445,000 | 0.66% | 6.88% | 34 |
| WA | 6054 | ASHFIELD | H | $401,000 | 0.59% | 6.44% | 34 |
| WA | 6054 | BASSENDEAN | H | $515,000 | 0.49% | 6.43% | 32 |
| WA | 6003 | HIGHGATE | U | $347,500 | 0.33% | 6.40% | 31 |
| WA | 6014 | WEMBLEY | U | $271,000 | 1.02% | 6.29% | 31 |
| WA | 6052 | BEDFORD | H | $617,250 | 0.52% | 6.29% | 34 |
| WA | 6164 | SOUTH LAKE | H | $348,000 | 0.75% | 6.17% | 31 |
| ACT | 2607 | MAWSON | U | $358,475 | 0.86% | 6.32% | 32 |
| ACT | 2603 | GRIFFITH | U | $444,000 | 1.85% | 6.05% | 34 |
| SA | 5118 | HEWETT | H | $395,000 | 2.09% | 6.99% | 30 |
| SA | 5050 | EDEN HILLS | H | $495,000 | 1.45% | 6.49% | 33 |
This list was compiled using DSRscore.com.au. Always do you own property research before making a buying decision.
