05 Apr High Crime Suburbs Outperforming Housing Market – Vanessa Jones
Housing in high-crime areas across Australia are outperforming the property market, according to RiskWise Property Research. The research house discovered high-crime areas, despite expectations, were trumping their safer neighbouring suburbs when comparing their five-year growth to the city’s median. Vanessa Jones gives us some examples.
Kevin: The information I have to tell you now flies in the face of many things we’ve told you. Housing in high-crime areas across Australia is actually outperforming the property market. That’s according to RiskWise Property Research. The research house discovered high-crime areas, despite expectations, were trumping their safe neighboring suburbs when comparing their five-year growth to the city’s median. Vanessa Jones from RiskWise joins me.
Vanessa, this has turned everything on its head.
Vanessa: Hi, Kevin. Thanks for having me. It is very strange to most people, I have to admit. I think most people would assume that a high-crime area would certainly mean that the prices would be bad. But our research at RiskWise has found that, in fact, it’s completely the opposite and high crime rate is not necessarily detrimental to property price growth.
Kevin: Is it geared to something else? Like if it’s an area that maybe has just become gentrified or something along those lines?
Vanessa: It certainly does. RiskWise has found that areas that are undergoing gentrification are particularly popular with buyers. What we’re finding is that in the inner rings of the city, property is just becoming too unaffordable for people, so they’re moving further and further out into the middle rings and even to the outlying areas. And while these areas are traditionally considered crime areas, because people are moving out there, the areas are getting gentrified and the prices are rising. So, it’s a win-win.
Kevin: Could you give me an example of maybe a suburb that is demonstrating this behavior?
Vanessa: Absolutely. I have a couple. In Melbourne, what we found is Frankston North actually delivered a 102% price increase over the past five years, which is compared to the benchmark, and that is very significant.
But that’s not all, because what we’re finding also is that it’s not peculiar to Melbourne; it’s across the board. Brisbane, Sydney… Sydney in fact an area that has the highest gun rate violence in the city, known as Busby, which is in the western suburbs of Sydney, had a huge increase as well.
Same with the Gold Coast and Brisbane. All these high-crime areas are actually outperforming the benchmark over a five-year period.
Kevin: So, out goes that rule of not buying in a high-crime area, it would appear. Is this a long-term phenomenon? Does it turn around over time?
Vanessa: I think what we’ll see is that as these areas are gentrified, prices will just keep rising compared to the benchmark. And of course, places like Adelaide and Perth, which have probably under-performed a little bit, aren’t really seeing this so much. However, the crime suburbs are still pretty much up there.
Kevin: Okay. So, it would seem to me that areas with high crimes, if they’re maybe combined with gentrification, may be the ones to look for as opposed to an area that has high crime with low gentrification.
Vanessa: I would say so, indeed. And I guess just to be a little bit cliché, we could possibly say that crime does pay.
Kevin: I think on that note, we’ll leave it. Thank you very much, Vanessa. Vanessa is from RiskWise.
Vanessa: Thanks, Kevin.