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These suburbs could be the next big thing

These suburbs could be the next big thing

Looking to invest in the next Balmain or Collingwood? A property investment expert has revealed suburbs around Australia that are set to gentrify.

Research by Peter Koulizos, the chairman of Property Investment Professionals of Australia (PIPA), has identified 12 suburbs in four states:

CitySuburbPostcode
SydneyArncliffe2205
SydneySt. Peters2044
SydneyTempe2044
MelbourneBraybrook3019
MelbourneFootscray3011
MelbourneWest Footscray3012
BrisbaneAnnerley4103
BrisbaneLutwyche4030
BrisbaneWoolloongabba4102
AdelaideThebarton5031
AdelaideWest Croydon5008
AdelaideHindmarsh5007

Mr Koulizos said gentrification is continuing in capital cities across the country – the key is to buy in those locations early to make the most of the potential price upswing.

If you had this knowledge a few decades ago, you would have bought in suburbs such as Balmain and Paddington in Sydney before they became highly sought-after and expensive,” he said.

“Likewise, in Melbourne, where you would have invested in Richmond or Collingwood before they became really popular and pricey.

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The four signs of gentrification

Mr Koulizos’ research found four key indicators when city suburbs are poised to gentrify:

  1. A greater decrease than the state average in people aged 18 years and under
  2. A greater increase than the state average in couples without children
  3. A greater increase than the state average in people that lived at a different address five years earlier
  4. A greater increase in the percentage of females working in professional occupations

When an inner suburb experiences an increase in childless couples and a decrease in children, it suggests younger adults are moving to areas that are close to universities and employment hubs, according to Mr Koulizos.

They can’t afford to live in the ritzy eastern suburbs of Sydney, Melbourne or Adelaide, so they target the more affordable and gentrifying inner-western suburbs of these cities,” he said.

Mr Koulizos said another indicator of gentrification is when older long-term residents are replaced by younger new arrivals.

It is often the case that before an area gentrifies it is full of older people who are still living in the houses they bought 50 years ago. As many of them are now on fixed incomes or pensions, they can’t afford to make substantial improvements to their homes, so in move the younger people,” he said.

“Many of them work in professional jobs in the city, on relatively high incomes, no dependants and have a high disposable income and borrowing capacity, so they have the ability to upgrade the period and character homes.

Mr Koulizos said the final sign of gentrification is an increase in the numbers of white-collar women, who have the funds to buy, renovate, upgrade or develop homes in the area.

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

  • If you switch your loan from fixed interest to variable rate
  • When you apply for a top-up home loan
  • If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
  • When you prepay the entire outstanding loan balance before the end of the fixed interest duration.

The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

Why does Westpac charge an early termination fee for home loans?

The Westpac home loan early termination fee or break cost is applicable if you have a fixed rate home loan and repay part of or the whole outstanding amount before the fixed period ends. If you’re switching between products before the fixed period ends, you’ll pay a switching break cost and an administrative fee. 

The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.

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Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.

Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.

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A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.

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If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

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A loan of shorter duration taken to buy a new property before a borrower sells an existing property, usually taken to cover the financial gap that occurs while buying a new property without first selling an older one.

Usually, these loans have higher interest rates and a shorter repayment duration.

What is stamp duty?

Stamp duty is the tax that must be paid when purchasing a property in Australia.

It is calculated by the state government based on the selling price of the property. These charges may differ for first homebuyers. You can calculate the stamp duty for your property using our stamp duty calculator.

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Australia no longer has no-deposit home loans – or 100 per cent home loans as they’re also known – because they’re regarded as too risky.

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The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.

Generally, lenders look favourably on applicants who save up a 20 per cent deposit for their property This also means applicants do not have to pay Lenders Mortgage Insurance (LMI). However, you may still be able to obtain a mortgage with a 10 - 15 per cent deposit.  

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While applying for a home loan as a casual employee, you will likely be asked to demonstrate that you've been working steadily and might need to provide group certificates for the last two years. It is at the lender’s discretion to pick either of the two group certificates and consider that to be your income. If you’ve not had the same job for several years, providing proof of income could be a bit of a challenge for you. In this scenario, some lenders may rely on your year to date (YTD) income, and instead calculate your yearly income from that.

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