In strong market conditions where home values are rising rapidly, buyers can quickly become priced out of the suburbs they are targeting. 

I always tell buyers that the greatest strategy in any market is to buy the best property in the best suburb you can afford. 

If you’re trying to buy in a hot spot and prices rise too far, don’t compromise by purchasing a poorly located, low quality property. Compromise on the suburb instead. Look to neighbouring areas, where you will typically find better value, and buy the best quality property you can find. 

This is called buying the ‘bridesmaid suburbs’ and it’s a great tactic for three reasons: 

1. Higher quality homes or A grade homes enjoy higher capital growth than B or C homes
2. They are also sellable in any market conditions because buyers always appreciate quality
3. Bridesmaid suburbs surrounding a hot spot are the first to enjoy the ‘ripple effect’ 

If you haven’t heard of the ripple effect, it’s when a hot spot becomes too expensive for most buyers, so they move to surrounding areas and this new competition pushes local prices up. 

This week, we identify some of the East Coast’s top hot spots for growth over the past year in both metro and regional markets and their more affordable bridesmaid suburbs. You might be surprised at how big the value gap can get between neighbouring areas. In some cases, it’s $100,000 or more. 

Over time, home prices in the bridesmaid suburbs often start to grow at a faster pace then their pricier neighbours (the original hot spot markets). A couple of examples are included below. 

NSW hot spots and bridesmaids:

Hot spot: Merewether in Newcastle, where house prices are up 30.4% to $1,630,000 

Bridesmaids: Hamilton South ($1,300,000), Cooks Hill ($1,286,000), Merewether Heights ($970,000)

Hot spot: Byron Bay on the North Coast, where house prices are up 59.3% to $2,350,000 

Bridesmaids: Suffolk Park ($1,450,000), Bangalow ($1,270,750), Mullumbimby ($930,000) 

Hot spot: Bulli in the Illawarra region, where house prices are up 32.4% to $1,350,000 

Bridesmaids: Woonona ($1,000,000), Corrimal ($799,500)  

Hot spot: Copacabana on the Central Coast, where house prices are up 54.8% to $1,437,500 

Bridesmaids: North Avoca ($1,405,000), Avoca Beach ($1,190,000) 

Hot spot: Northbridge on Sydney’s Lower North Shore, where house prices are up 25.5% to $3,840,500

Bridesmaids: Cammeray ($2,585,000), Willoughby ($2,395,000)  

Hot spot: Kogarah in Sydney’s St George region, where house prices are up 27.5% to $1,460,000

Bridesmaids: Bexley ($1,300,500), Rockdale ($1,250,000), Banksia ($1,156,750) 

Queensland hot spots and bridesmaids:

Bridesmaid turned hot spot: Sunrise Beach in Noosa, where house prices are up 33.7% to $1,150,000 

Neighbours: Sunshine Beach ($2,042,500)  

Hot spot: Alexandra Headland on the Sunshine Coast, where houses prices are up 25.8% to $1,200,000 

Bridesmaids: Buddina ($980,000), Mooloolaba ($947,500), Maroochydore ($740,000) 

Hot spot: Bundall on the Gold Coast, where house prices are up 25.9% to $1,250,000

Bridesmaid: Benowa ($1,004,000)

Hot spot: Palm Cove in the Cairns region, where house prices are up 24.2% to $745,000 

Bridesmaids: Clifton Beach ($616,500), Trinity Beach ($455,000), Kewarra Beach ($455,000) 

Hot spot: Yeronga in Brisbane’s south-east, where house prices are up 25.2% to $1,105,000 

Bridesmaids: Tennyson ($890,000), Fairfield ($800,000), Annerley ($787,000)  

Hot spot: Daisy Hill in Brisbane’s Logan region, where house prices are up 20.7% to $581,706 

Bridesmaids: Springwood ($547,500), Slacks Creek ($357,000), Woodridge ($299,000)  

Victoria hot spots and bridesmaids:

Hot spot: East Geelong in Greater Geelong, where house prices are up 22.3% to $795,000 

Bridesmaids: Newcomb ($500,000), Whittington ($409,000)

Hot spot: Brown Hill in Ballarat, where house prices are up 20.2% to $537,778   

Bridesmaids: Black Hill ($491,000), Ballarat North ($470,000) 

Hot spot: Bendigo in Greater Bendigo, where house prices are up 25.3% to $517,500 

Bridesmaids: Spring Gully ($470,000), Kennington ($430,000), Flora Hill ($400,000)

Bridesmaid turned hot spot: South Melbourne, where house prices are up 16.5% to $1,650,000 Neighbours: Middle Park ($2,657,500), Albert Park ($1,900,000)  

Hot spot: Pascoe Vale South in Melbourne’s Moreland region, where house prices are up 17.8% to $1,125,000 

Bridesmaids: Coburg ($1,085,000), Pascoe Vale ($950,000), Oak Park ($929,000)

Hot spot: Black Rock in Melbourne’s Bayside area, where house prices are up 16.4% to $2,037,000 

Bridesmaids: Sandringham ($1,985,000), Beaumaris ($1,730,000), Parkdale ($1,207,500) 

ACT hot spots and bridesmaids:

Hot spot: Mawson in Woden Valley, where house prices are up 31.2% to $985,000 

Bridesmaids: Farrer ($925,000), Torrens ($915,000), Chifley ($851,000) 

Hot spot: Gordon in Tuggeranong, where house prices are up 25.6% to $697,000 

Bridesmaids: Conder ($654,250), Banks ($630,000)

Source: CoreLogic, price growth year to March 31, 2021, suburbs with 40+ sales per year,  June 10, 2021 

So, don’t be afraid to buy in bridesmaid suburbs! These areas can offer amazing long term capital growth prospects and are the perfect affordability solution if your budget is getting stretched. 

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters. 

For more information including articles, checklists, guides and more visit McGrath’s Insights Centre.

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