While most investors are familiar with the real estate cycle for large markets like a city or a State, many don't recognise that smaller markets like individual suburbs also experience cycles that may not always move in line with the broader market.

This creates opportunities for investors who do their research properly. While prices are currently flat in some suburbs of Melbourne, Sydney and Brisbane, other suburbs are experiencing strong growth in prices.

The predominant influence on this difference in growth rates are local factors like the stock of properties for sale competing for buyers. Another is location. Some locations are just more popular or fashionable than others and currently it is the more affluent suburbs and the lifestyle suburbs that are performing well.

Looking at figures released by the Victorian Valuer-General reveals massive gains in house prices over the last 10 years in some suburbs and minimal growth in others.

The median value of properties in some suburbs increase by 230% to 260% over the 10 year period, equivalent to an annualised capital growth of up to 14%. Other suburbs failed to double in price in that time and some regional suburbs even failed to increase in value by 50% over the 10 year period.

As you do your research it is worthwhile studying suburban growth rates over the short and longer terms. Occasionally a suburb experiences a period of rapid growth in property values in a short period of time, which results in those suburbs leading in a suburban comparison of growth rates published in the newspapers. The problem is that usually the growth rates in these suburbs will then settle back to the growth rates they have experienced in the longer term. Past trends of growth in property values will provide a good indication of future rates of growth.

In other words, if the long term average growth rate of prices in a suburb is 6% and it has a short burst of strong capital growth (say 12%), the growth in the prices in that particular suburb is likely to eventually fall back in line with its average long-term growth - back to 6%. And the longer the history of 6% growth, the more likely this is going to occur.

Similarly several suburbs keep on recording median price growth rates ahead of the market for that State. Further research of these top performing localities will often find that these suburbs are located close to the city or the beach or have a high degree of housing redevelopment

To choose a top performing property investment you must do your research to find these high growth suburbs, and then you must find the right property in that suburb that will be in continuous strong demand.

You can see how a suburb has performed over the last 12 months by entering its postcode at www.homepriceguide.com.au and click on postcode snapshot. You can get details of the suburb?s demographics and price movement for the last 12 months for free. Or you can purchase more detailed reports and historical sales data. Residex www.residex.com.au and RP Data www.rpdata offer similar services.

We use this type of research and the more detailed information we get from the REIV when we buy investment properties for clients of Metropole Buyers Agency property acquisition services, www.metropoleproperties.com.au. 

We have offices in Melbourne and Brisbane and work on your behalf as licensed estate agents.  Remember Metropole has no properties to sell, but we help you research for, then locate and negotiate for investment properties, often with a twist, or with strong upside potential. tehn or property management departments help look after your property in the long term. 

Click here for details of how Metropole can help you find a top performing investment property