High-crime suburbs in Sydney and Melbourne have outperformed the rest of their cities’ respective housing markets, according to new data from RiskWise Property Research.
According to the study, the median house price in Sydney has grown by 69.2% over the past 10 years. However, capital growth rates in all 10 high-crime areas in the city have surpassed that of Greater Sydney.
The south-west suburb of Liverpool has registered the highest increase at 108.1%, nearly 40% more than the growth of the median.
Bankstown, Greenacre, and Guilford also posted growth rates of more than 90%, while property values in Auburn, Busby, Merrylands, and Punchbowl rose to around 80%.
Meanwhile, the 10-year capital price growth was 62.9% in Melbourne -- a figure that is lower than in nine out of its 10 high-crime areas.
The inner suburb of Ascot Vale reported the highest capital growth rate of the past decade at 77.1%.
Brunswick, Craigieburn, and Frankston all outperformed Melbourne’s housing market by more than 10%.
“We found affordable high-crime areas with significant gentrification are likely to produce strong price growth, particularly when dwelling prices in the inner and middle rings are severely unaffordable,” Doron Peleg, RiskWise chief executive officer at RiskWise, told Business Insider.
However, Pete Wargent, co-founder and chief executive officer of property buying agency AllenWargent, told Business Insider that buyers were not actively looking for homes in high-crime areas and that there were several other factors driving house prices.
“Despite the stigma that’s typically attached to areas with crime issues, and the potential challenges that go with that over the short term, over a reasonable timeframe this has tended to be outweighed by the combined benefits of affordability, convenience of location, and gentrification, from a housing market performance perspective,” he said.
Peleg said land scarcity and undersupply of houses in Sydney and Melbourne had spurred demand in even in higher-crime areas, with affordability being the key driver for property price growth.
“Our nationwide research actually found gentrifying suburbs with high crime typically deliver strong price growth and outperform the local benchmark,” he said. “This is also consistent with the international trend where areas that had been notorious enjoyed gentrification and major price increases.”
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