Locating exceptional suburbs in these eastern Australian capitals should not really be thought of as trying to find diamonds in the rough, but rather that you are buying into a minefield. While there are perhaps a couple of potential options, purchasing in these markets is a dangerous conversation to be having as an investor. 

If we were to buy in Melbourne and Sydney right now, we would be buying against the grain as these markets are entering into a slow down phase after a prolonged period of growth.

What this means is that sales volumes have slowed down, the number of properties going to auction has decreased and yields are at a relative low point. These are not generally conditions conducive to growth. 

Having said that, there are always exceptions with some suburbs experiencing different market conditions from each of the cities at large. 

As a technology-based research platform that uses Artificial Intelligence to locate high-performance investments from across Australia, we are very data-driven in our approach. Using this data we have identified a few suburbs in Sydney, Melbourne and Brisbane that are looking reasonably good and where the AI is suggesting positive things. 

Sydney 

In Sydney, we are looking in and around the Inner West. This area is perhaps currently the highlight of the Sydney Market from a data perspective. Suburbs with very strong underlying indicators, where the AI has identified very good signals for potential growth moving forward include Dulwich Hill in the Marrickville Shire, Balmain in the Leichhardt area and Ashfield in the Ashfield local government area. 

What could be driving these markets? 

Beyond the AI data, we generally don’t like to speculate why this may be occurring, however, it could be a result of the Light Rail which is having a positive impact on resident demand. Also, it is promising to see three areas, in reasonably close proximity, clustered together exhibiting the same signals. You would assume they are doing similar things for similar reasons. 

Melbourne 

Once again we have a cluster of suburbs down in the south-east area of Melbourne that are showing similar growth signals. The southeastern side of the city including the suburbs of Clayton South and Frankson North are all looking acceptable from a predictive AI data perspective. 

What could be driving these markets? 

Following the recent Victorian election, and Labor wins, this southeastern side of the city has changed from a predominantly Liberal space to arguably the new Labor heartland, which could perhaps be impacting the market in this area. 

Brisbane 

The reason why Brisbane has been a concern in recent years is that the dynamic between supply and demand has been thrown to the supply side in a very inconsistent manner. 

There is a degree of risk associated with the Brisbane market because while you have really positive factors such as population growth there is also a big risk around development and additional supply coming into the market. 

What this means is that while you might buy into a market where the fundamentals look very good on paper right now, things could change very quickly after you’ve purchased. 

Having said that, the satellite area of Ipswich is currently presenting as a strong inland cluster with suburbs including One Mile, Collingwood Park, Goodner and Newtown all currently looking good from an AI, data backed perspective. 

What could be driving these markets? 

The council in this area is entrepreneurial and has long punched above its weight. They appear to have great success in attracting new enterprise, employment and development. As suburbs to the south of Brisbane, they offer a convenient option for city workers to live and commute. 

Investor warning 

While these areas outlined above, look good from a data perspective - they are not approved locations of our Advisory service. This is because there are far better opportunities available across the nation. We would only recommend these areas to investors who were unable or unwilling to invest elsewhere. 

Better investment options to the south and west 

While there are always exceptions to the rule, investing in Sydney, Melbourne and Brisbane right now, is a dangerous prospect for investors. With these markets cooling and entering a slowdown phase, current data indicates that casting your net toward the southern and western capitals of Adelaide and Perth will reap better short term rewards. 

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