In Data We Trust

The Next Hot SUA

November 22, 2022
Select RP Team

Introduction

As I promised last month, here are the top SUAs (Significant Urban Areas) for growth:

Significant Urban Areas (SUA's)

The Australian Bureau of Statistics lists about 100 SUAs. They are mostly cities or large country towns. But in some cases, an SUA can also cover an area just outside a city, for example:

· Gold Coast – Tweed Heads

· Newcastle – Maitland

· Canberra – Queanbeyan

Price Point

There’s a broad range of price points in this list to suit many investor budgets:

Demand to Supply Ratio

The key metric in the choice of SUAs was the average DSR+ for each SUA.

Some of these don’t look too impressive when compared to the national average. But these are averages for an entire SUA. The SUA will have individual suburbs with much better growth prospects.

Market Cycle Timing

Market Cycle Timing (MCT) is a score out of 100 for the likelihood that a property market is about to enter its next growth surge. The higher the score, the better the immediate growth prospects are.

None of these SUAs have a high MCT. This is because we are coming down from a nationwide boom.

In fact, according to the MCT, the Adelaide SUA “should” be nearly finished its growth.

Long-term Historical Average DSR+

But some of these SUAs are still well ahead of their long-term average.

Yield

Some of the yields are pretty impressive too.

Anything above 5% is pretty good. But Bunbury and Townsville are edging on 6%.

SUA's Suburbs

The following chart shows which of these SUAs have most of the hot suburbs from the top 250 suburbs by DSR+.

Note that this is limited to only the SUAs mentioned earlier. Some of the top 250 suburbs are outside these SUAs.

Adelaide has 121 hot suburbs, almost half of the 11 SUAs combined. Melton, Bunbury and Busselton have only 1 each.

Here’s an interesting consideration, the percentage of an SUA’s suburbs that are considered “hot”:

Over a quarter of Adelaide’s suburbs are still considered “hot” – good for strong growth.

So, Which SUA is Best?

The Adelaide SUA is most likely to record the most growth over the next 12 months since it has the highest average DSR+ and the highest % of hot suburbs.

But Adelaide is already well through its growth surge this cycle. So, Perth and Townsville might have better growth prospects over the next 3 years as whole SUAs.

But here’s the important thing: you can’t buy a whole SUA. You still have to pick a suburb in one of these SUAs. And although the whole SUA of Adelaide is well advanced in its cycle, it still has a large number of top growth candidates at the suburb level.

Commentary by

JEREMY SHEPPARD

Director of Select Residential Property
Founder of DSR Data

In Data We Trust

The Next Hot SUA

Introduction

Significant Urban Areas (SUA's)

Price Point

Demand to Supply Ratio

Market Cycle Timing

Long-term Historical Average DSR+

Yield

SUA's Suburbs

So, Which SUA is Best?

JEREMY SHEPPARD

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