How to Buy Well at an Affordable Price

When we think about our ideal locations to buy a property, we all know where the best suburbs are. In Sydney, they are in the East and typically close to the water.

 

For the most part, these suburbs are also incredibly expensive. To buy a house in a quality location in the Eastern Suburbs, you’re looking at paying well above $3 million.

 

For many investors, this type of price point might not be that affordable; however, there are ways we can still make the most of these locations and buy properties that are very similar in nature.

 

One of the things that I always look at when buying property is to be as close to the affluent suburbs as possible. That doesn’t mean you need to buy in them, but the closer you can get, the better.

 

What typically happens with suburbs over time is that as more and more people eventually want to live in the area, there is a trickle-down effect that takes place. First, the suburbs that are near the most affluent suburbs begin to see increased demand. Then, when they become more expensive, the next suburb along starts to increase in value.

 

As an investor, your job is to find a location that is as close to your ideal location as possible, that is still affordable. Not just affordable to you as an investor, but also represents value to the owner-occupiers who are buying in the area.

 

In Sydney, this can be tougher. House prices are going to be expensive in the likes of Bondi Beach or Bronte, but even when you move towards the city to an area like Woollahra or Paddington properties are still expensive. You generally need to go west of the city to find more reasonable prices. However, over time with the growing population and more gentrification, we will see the flow-on effect take place.

 

On the other hand, there are great locations like Brisbane and Newcastle, where you can get a lot closer to the affluent suburbs. Instead of needing to be 30 minutes away, in the smaller cities you can literally buy in the next suburb over and pay a fraction of the price. All while having access to the same amenities, schools, and employment opportunities.

 

When you’re investing in property, you always want to be as close to the affluent areas as possible. These locations are going to be the aspirational areas for many people, and they will do whatever they can to buy into these areas.

 

You’re better off buying into a blue-chip area in a more affordable area than buying into cheaper suburbs in the outer suburbs.

 

As we are seeing in the current market, even when interest rates are rising, there is still strong demand for homes in the better areas. In fact, there is a huge shortage of supply of quality homes in Sydney in affluent areas. This will keep driving up prices.

 

In affordable areas, buyers are getting squeezed by higher interest rates, and wage growth will likely not keep pace with higher property costs in the short term. That means the upside is limited compared to the blue-chip locations.

 

When in doubt, invest in quality. You’re never going to regret buying an A-grade asset.

 

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