Where to buy: Trendy suburbs versus boring areas with room for growth

There is nothing boring about making a smart investment. Trendy suburbs may offer the lifestyle that you desire but once the concept of affordability is placed in the equation it is often the illogical choice. Generally the hip rental areas come hand-in-hand with a hefty price tag that doesn’t necessarily suit a first-time budget.

The trendy areas are often full to the brim with tenants, where the savvy investors have already gained market share. As a result, these highly sought-after suburbs are likely to have already experienced strong prices growth and, let’s be honest, probably pricing most of us out of that particular market. That is unless you are a first-time buyer with access to a large sum of money from the bank of mum and dad.

When it comes to buying a first home, especially under current market conditions, it is important to be realistic in what you are able to afford both now and when interest rates rise. It could be tempting to financially overextend to purchase in a trendy area, particularly when the cost of borrowing is low. The current interest rate environment will not last forever. Speak to any financial adviser and they will inform you that overextending is not a wise choice, even if it does mean you can walk to your favourite cafe.

Ultimately the journey to home ownership involves making sacrifices and a well-educated purchase. This may mean you will be living out in the suburbs and not next door to a barrister (remember they are probably renting).

Keep in mind that the aim of your first property purchase should be one that allows you to amass equity. The quicker that equity is amassed the swifter your upsize journey will be towards what you deem as your “desirable suburb”.

Begin your property search in the neighbouring suburbs of the current trendy one. A timely purchase may mean the ripple effect of price growth has not hit the surrounding region. This could offer the opportunity to purchase at a more realistic budget. A bike could be purchased with the money saved allowing you to cycle to your favourite cafe. Positive budget and health benefit outcomes in one.

If the surrounding area still isn’t within reach, start to look for potential regions of growth. Try to identify areas that are transforming, often these were once avoided but are now becoming gentrified. Or look for areas that are about to undergo significant infrastructure projects. These are markets that could potentially offer the price growth you are after. They may not be the area you desire to live but your first purchase needs to be a smart one. Even if it means you become a landlord by purchasing in an area you can afford and continue to rent in your trendy suburb. It still means you have started your journey on the property ladder.

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