Why property investors should look to ‘bridesmaid’ suburbs

“Always the bridesmaid, never the bride.” There’s rarely any truth to that in the world of real estate investment.

Smart investors are too often looking out for quality “bridesmaid” suburbs – those usually fringing the area’s most popular conurbations – knowing that often, if they possess the right metrics, they’ll soon become brides in their own right.

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“People wanting to get into Brighton go to East Brighton instead, or go to East Bentleigh instead of Bentleigh, because they’re much more affordable and make a great alternative investment,” says Michael Yardney, chief executive of Metropole Property Strategists.

“In general, property cycles start at the top, in the more affluent suburbs, and then ripple outwards. So, unless the neighbouring suburb has something wrong, like a main highway or different social or demographic factors, then often that can replace the more desirable suburb as a good investment, and the bridesmaid eventually becomes the bride.”

Suburbs often considered “lesser” ones, time and time again, later come into their own and prove excellent investments, too, says Louis Christopher, managing director of SQM Research.

“For instance, that can happen to what are considered first-home buyer suburbs,” he says. “In the long term, they change their demographic and become middle-income areas. The data shows that happening time and time again.

“Presuming that cities continue to grow, it will usually absorb those first home suburbs that once were considered outer suburbs until they’re no longer thought of like that. For instance, my grandparents bought in St Ives, which was once regarded as an outer, more affordable place. But now it’s an extremely affluent locality on Sydney’s north shore.”

The big advantage of buying in a bridesmaid suburb is that the entry price is generally much lower than in the more highly prized suburbs. Yet, if the fundamentals are still right, the price growth can be even stronger. Rents can soon catch up with – or even outperform – those charged elsewhere, too, as tenants shift to places with more stock or perceived lower rents.

Their potential can be so much more than in the suburbs that have already achieved their maximum price or yield as long as they enjoy similar infrastructure, amenities, transport and a comfortable population.

The Investors Agency buyer’s agents director, Darren Venter, is always looking out for bridesmaid suburbs or “exodus” markets growing in value and appealing to a general investor with prices between $300,000 and $700,000.

“In that price range, we have the potential to see the greatest growth,” he says. “We need to look at factors like available employment, education, health facilities and commercial premises to make sure any growth will be sustainable.

“A lot of people have a crowd mentality when they invest, but it’s important to focus your attention instead on the right elements. It’s critical to follow the data all the time and look at price points and yields and the directions in which they’re heading.”