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As population grows, demand increases and prices rise in a suburb often buyers will be priced out and the surrounding suburbs will start to experience similar characteristics, this is called the ripple effect. The ripple effect is something all investors and potential buyers alike should be familiar with.

It frequently happens in capital cities where the price of the CBD and surrounding suburbs increase to a point where the average buyer can no longer afford. Buying a property in a zone starting to experience the ripple effect means that you have the opportunity to invest while prices are still affordable and wait for the wave to increase property values faster than you otherwise might see.

The first step to finding properties within the ripple effect zones is identifying the suburbs that are currently booming. These are the suburbs that, in the past 12 months, have shown impressive growth. However it doesn’t stop there, you additionally need to thoroughly investigate and understand the cause of the growth. Ideally, the growth will not be due to a short-lived spike brought on by an influx of new housing developments and instead due to sustainable, long-term improvements such as new infrastructure.

TIP: When assessing if a suburb is part of the ripple effect, check the surrounding geography. E.G. If it is surrounded on three sides by water or parkland, there will be a greater chance of growth in that suburb as well as overflowing into neighbouring areas.

Once a growth suburb has been identified, it’s time to list potential surrounding suburbs in the ripple effect. These will be the areas that are starting to show the signs of renovation, new development and new commercial activity and will ultimately appeal to the same demographic.

It is additionally important to determine any reasons that may halt the ripple effect from happening such as, lack of desired lifestyle features, large employers shutting down or plans for future unwanted infrastructure.

Buying in these areas is a good strategy, especially if you’re looking to purchase an investment property. However, it can be hard getting the formula right and actually finding properties in regions experiencing the ripple effect, this is where a buyers agent comes in. Buyers agents know what to look for, have the right contacts and make the whole process significantly easier for you. They will aid you from start to finish to ensure you’re getting the best value for your investment.

To learn more about the ripple effect or get in touch with a buyer’s agent contact us today!