What makes a property hot spot? We're regularly asked at APM to pick hot suburbs for a range of different reasons. It might be that we're asked to pick those metropolitan suburbs that look most attractive for property investors, or those suburbs that provide the best value for families needing to move out of their 2 bedroom inner city unit to a few more bedrooms in the suburbs.


While each different request requires it's own considerations, there are some criteria and analysis that regularly feed into picking these areas.

Obviously looking at movements in price is key. Down at the suburb and postcode level, the best indicator of movement in property values are median prices i.e. the middle price of all sales for a local area. While straight median prices are affected by changes in the type of properties being sold, this is mitigated to some extent by the fact that properties within a suburb are more homogenous than across a whole city.

One factor we consider is how median prices have moved recently, both in relation to a suburb's own historic growth levels and also how they’ve moved relative to the rest of the larger region or even city. Abstracting from specific local economic factors, markets are largely cyclical. It's unlikely that property values will grow (or fall) at rates significantly different from the larger region for long periods of time. So recognising areas where this has occurred recently can indicate suburbs that may have more potential than others for near-term price growth, or at least outperformance.

Auction clearance rates are another indicator that gets a lot of media attention at a city-wide level, and with good reason. Weekend auction clearance rates are known within a very short time frame, unlike many other data points (such as private treaty sale prices, average days on market, discounting, etc). Historically, auction clearance rates have an amazingly close correlation with house price changes. For regions, or even larger suburbs, this allows us to identify areas with strong demand for property and take this into consideration when looking at future growth potential.

Other factors considered are levels of stock on the market, both new and ongoing, the average days a property takes to sell and how much the average discount is between the initial asking price and the final sale price.

For property investors, rents and rental yields are critical. So when making selections for investors we take into account both the outlook for capital growth and well as rental yields.

Finally, local economic news and conditions are taken into account. Whether it be new local industries springing up, old industries struggling or dying, new transport infrastructure, a change in available property due to new developments or the building of new shopping centres or hospitals. All will have some effect on the relative desirability of surrounding suburbs or at least on the level of money in the local economy available to purchase houses and units.

Because of these local factors, picking suburbs is a lot more difficult than picking trends at a capital city or regional level. All these considerations along with reliable property data put the process of picking hot suburbs on some solid foundations.