We usually associate “blue chip” with shares on the stock exchange – those stocks which are generally high quality, and widely accepted products or services. Blue chip companies are known to calm the storm of an economic downturn, showing reliability for long-term stability and growth as an investment.
But what about blue chip property suburbs? Blue chip property suburbs are residential areas that hold the same characteristics as a blue chip company. Blue chip suburbs are stable and slow growing. Blue chip suburbs can be residential areas that are prime for gentrification or redevelopment and they will encompass attractive, well-built dwellings that bring in high demand to both the sale and rental markets.
Three ways to spot a blue chip suburb
1.) Sales and growth for the suburb
This statistic looks at the median sale price of a property in the area in relation to the total number of sales in the area spanning over a certain number of years.
Reviewing these statistics will present significant characteristics of a suburb, as you will be able to see if there is a steady line of growth in regards to the price per sale in the area and you will also be able to see if the number of sales has stayed stable over the years with a steady increase in price per property. If the number of sales has stayed relatively stable over time and is growing with the price, it is a good indication of how the demand in the area is complimenting and driving a healthy blue chip suburb.
2.) Rental and growth for the suburb
The rental versus growth over time works on the same principle as the sales and growth chart for a suburb. However, this chart will represent the other side of the residential market. The rental market in a blue chip suburb needs to be strong and thriving. This is because as blue chip suburb property prices rise with demand, more people will look to rent in the area rather than attempt to purchase a property. Therefore, a strong rental market is actually key to a stable slow growing blue chip suburb.
3.) Home ownership
Home ownership reflects the suburb’s property status and blue chip suburbs will usually show a relatively similar percentage figure in terms of renter versus home owners. This reflects a healthy balance once again of homebuyers and rental demand. It is also testament to the suburb’s ability to foster investment properties for people, as all these rental properties are actually retrieving a rental yield for its owners.
The BrickX properties of Bondi Beach, Double Bay, Annandale, Enmore, Mosman and Prahran are all in what’s considered to be blue chip suburbs.
They all display the qualities of blue chip properties and have been hand-picked initially because of their individual suburb characteristics, then secondly because of each property’s high quality construction and refurbishments, with low strata costs. These suburbs look to transition smoothly into the future in terms of sales and rental demand while yielding a stable return on investment. Part of BrickX’s investment strategy is to look at properties situated in blue chip suburbs. These types of suburbs and properties cater extremely well to self-managed super funds or risk savvy investors eager to diversify their existing portfolio.
The opinions and beliefs expressed by the authors and forum participants as part of this communication do not necessarily reflect the opinions and beliefs of BrickX, BrickX Financial Services or other entities within the BrickX group.
