Melbourne's High-Crime Suburbs Outperform Property Market
Feb 27, 2018
Housing in high-crime areas such as Frankston North, Braybrook and Ascot Vale are outperforming the Melbourne market, according to research house RiskWise Property Research.
Riskwise identified the Top 10 Melbourne high-crime areas (Source: Crime Statistics Agency) to compare their five-year growth to the city’s median.
The results were astounding with Franston North topping the city’s median five-year growth of 60 per cent, by a staggering 41 per cent (coming in at a hefty 101 per cent price growth).
RiskWise CEO Doron Peleg said most property investors believed high-crime rates would have a detrimental effect on property price growth, but it was apparent the opposite was true.
“Investors commonly attribute too much weight to crime figures and should more objectively analyse the financial risks when making property investment decisions,” Mr Peleg said.
“Our nationwide research actually found gentrifying suburbs with high crime typically deliver strong price growth and outperform the local benchmark.”
In Melbourne, many of the Top 10 high-crime areas outperformed the market due to very strong demand from owner-occupiers and investors for affordable properties. This was particularly true for houses, with many of these areas being in the northern and western suburbs.
“Take Frankston North, as an example. The suburb endured one of the highest burglary rates across Melbourne, yet it delivered exceptionally strong median price growth, doubling over the past five years,” Mr Peleg said.
“The key price-growth drivers in such suburbs were affordability, accessibility to the CBD and local suburb features.
“These positive factors appeared to significantly outweigh the negatives brought by high-crime. Also, with unaffordable dwelling prices in the inner and middle-rings, the outer-rings have become increasingly sought after among a variety of buyers.”
The table below details the median price growth for the top 10 high-crime areas in Melbourne against the local benchmark.
He said in Adelaide and Perth, high-crime areas undergoing significant gentrification delivered strong growth. For example, median price growth in Playford, Adelaide, had outperformed the market over the past five years.
“In summary, our research found that affordable high-crime areas with significant gentrification were likely to produce strong price growth. Whereas suburbs with high-crime and low-gentrification typically deliver growth below the city benchmark.” he said.