Where are Australia's next property hot spots?

The tail end of 2013 was a lucrative time for property investors and home owners alike as property prices across Australia boomed thanks to improved confidence and low interest rates.

This year a broad range of suburbs – from the northern NSW city of Coffs Harbour to the outer Melbourne suburb of Lynbrook – are set to post strong price growth, according to a report from Property Power Partners. Titled “Australia’s Top 10 Boom Suburbs for 2014”, the report identifies suburbs where property prices are likely to rise by more than 10 per cent per annum.

Investors who buy in suburbs poised for a boom can make a tidy profit, according to the report’s author, Property Power Partners director John Lindeman, who has 40 years’ experience as a successful property investor.

“By buying in suburbs where prices are set to rise and selling before the growth stops, investors can make significantly higher returns than those who ‘hold and hope’, even with the high entry and exit costs that such short-term investments tend to incur,” Lindeman writes in the report.

The top 10 boom suburbs listed in the report are:

1. Coffs Harbour, NSW
2. Young, NSW
3. Lynbrook, VIC
4. Corryong, VIC
5. Booral, QLD
6. Moggill, QLD
7. Streaky Bay, SA
8. Beachport, SA
9. Chidlow, WA
10. August, WA

Young and Streaky Bay have the highest current rental yields of the 10 hot spots, both returning a 5.9 per cent yield for investors. Rental yield is how much rent you receive as a proportion of what you paid for a property.

Both Young and Streaky Bay have a current median selling price for houses of $220,000 and a weekly median rental price of $250.

The suburb of Chidlow, 45 km east of Perth, is the most expensive of the 10 suburbs on the list, with a current median price of $520,000. The rental yield is currently 4.2 per cent.

Corryong, located in north-eastern Victoria about 120 km east of Albury-Wodonga, boasts the cheapest homes, with a median price of $170,000 and a respectable rental yield of 5.5 per cent.

Picking the next boom ’burbs

Lindeman selects the property hot spots by analysing population, household, housing and economic data from the Australian Bureau of Statistics, Housing Industry Association, the Bureau of Meteorology, and the Australian Bureau of Agricultural and Resource Economics.

“Many housing market indicators such as sale prices, weekly rents, price and rent movements are lagging indicators – that is, they provide information about past buyer, price and renter activities,” he says.

“Our approach is to use only leading indicators to forecast renter and buyer demand trends, such as current media asking rents, current rental vacancies, current median asking prices, estimated current media selling prices, plus current sales and listings which we aggregate from publicly advertised property listings and rental vacancies.”

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