The supply versus demand ratio of properties in an area is a key driver of price growth. If there is no more capacity to build in the suburb, but demand keeps on growing, prices will likely climb.
Top tips for finding high-demand, low-supply areas:
- Look for areas where the rental yield is rising. This indicates that an area is popular among renters. When renters become homeowners, they also tend to buy in the same area they are renting in;
- Look at the demographics of people moving into the area. Without meaning to sound ageist, suburbs where the median age is around 35 or so tend to gentrify faster as these demographics can have better income and are therefore able to afford to buy or rent more expensive properties;
- Look for areas with rising population. Population in itself is not enough to push prices up, but when combined with other indicators such as rising income and low supply, this is a good indication that property prices will grow in the area.