by Tony Lawson 
A savvy way to pick a potential property hotspot is to seek out the “ugly duckling” suburbs — according to one of Australia’s leading real estate experts.
Terry Ryder, director of Hotspotting, has named five city spots around Australia he considers to be underachievers with a promising future in his latest report, Top 5 Cheapies With Prospects.
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These “ugly” LGAs all have five common ‘must haves’ — rising sales activity, potential for capital growth, plenty of houses at affordable prices, strong infrastructure and proximity to major job hubs.
“Ugly duckling is an odd term for something you would recommend to real estate investors, but the term is apt,” Mr Ryder said.
“The ugly duckling of the fairytale was considered unappealing because those around it didn’t understand what it was.
“Yet, it ultimately evolved into a graceful swan. There are suburbs with similar qualities. They are places considered unattractive by those looking through uneducated eyes – but they have the potential to transform into real estate swans.”
Hotspotting’s report unearthed two affordable areas in Perth (Armadale and Gosnells) and in Adelaide (Salisbury and Playford), as well as one in Brisbane (Ipswich), which have the most strategic buying opportunities for the first half of 2023.
For the “cheapies” list he focused on LGAs with median prices under $500,000, which left out any suburbs in greater Sydney or Melbourne.
Although not “cheapies” for the sake of the report, Mr Ryder told News Corp Australia that he would put his money on the LGAs of Melton for Victoria and Liverpool in NSW.
The more expensive cities have plenty of examples of yesterday’s ugly ducklings now trading as today’s very pricey swans, with Mr Ryder highlighting Richmond in Melbourne, Balmain or Surry Hills in Sydney, and Bulimba in Brisbane as prime past examples.
“There are suburbs, once considered primarily industrial in nature, which have changed through urban renewal into thriving residential areas with steady price growth,” Mr Ryder said.
“The significance of these areas in the residential market has grown because affordability has become a headline issue in the housing industry, which is one reason why the cheaper areas of our capital cities have recorded good capital growth over time.”
His advice to first-home buyers and investors on a tight budget is to target areas with affordable prices and the five major ‘must haves’.
“Not all of the cheaper areas have the potential to evolve into real estate swans, but some of them do. The task for property investors is to identify areas that have reasons to out- perform,” he said.
Highlighted because it is the fastest-growing LGA in South Australia, Playford has multiple major job nodes, affordable houses and high yields.
It is also considered to be South Australia’s logistic and distribution capital, is home to the Edinburgh Defence complex and has significant investment such as $175m being sunk into the Playford Health Hub and $250m for Playford Alive Town.
Mr Ryder said the property market in Adelaide’s northern City of Playford LGA is experiencing rising momentum, fuelled by a revitalised economy and affordability that appeals to first-home buyers and investors on a budget.
“The region’s property market is further characterised by very low vacancy rates and rental yields, which are among the highest of the country’s major cities.”
City of Salisbury, South Australia
Median house prices between $370,000 and $620,000
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The City of Salisbury has defied the negative impacts of Covid through a construction boom made up of medium-scale projects, now generating thousands of jobs.
Mr Ryder’s examples include; defence projects worth more than $4bn, the $1.9bn Edinburgh Parks Precinct, a $885m transport corridor, the Gawler train line electrification, $250m spent on the GMH site redevelopment and a $240m health hub.
“All this activity has buoyed the property market and is seeing rents rise along with strong yields and extremely low vacancy rates.
Along with affordable house prices, this attractive combination is providing opportunities for entry-level investors,” he said.
