Friday, October 2, 2009

PROPERTY TIP: Suburb gentrification takes time


Buying in a rundown suburb sounds like a great idea – think how much money you’ll make once the area gentrifies, right? Look at Paddington - from slum to chi chi in a relatively short time. And St Kilda in Melbourne was once the frowned-upon locale of junkies and prostitutes but now all the well-heeled types want their slice of "inner city grunge", and will pay a nice price for the privilege. But it's not as simple as that. Gentrification can take 20 years or more to occur, so can you put up with the crime, less-than-salubrious surrounds and commute to wait for the price gains? The gentrification process can take two or three boom-to-bust property cycles before it takes hold and starts generating capital price growth.

Related stories:
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How to choose property that will grow in value


Pictures: JohannaEkmark

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