Housing in high-crime areas across Australia are outperforming the property market, according to RiskWise Property Research.
The research house discovered high-crime areas, despite expectations, were trumping their safer neighbouring suburbs when comparing their five-year growth to the city’s median.
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.
“We found affordable high-crime areas with significant gentrification are likely to produce strong price growth, particularly when dwelling prices in the inner and middle rings are severely unaffordable.”
Mr Peleg said investors should more objectively analyse the financial risks when making property investment decisions.
In Melbourne, while price growth for houses was similar to the benchmark, some suburbs significantly outperformed the market. Frankston North delivered growth of 102 per cent over the past five years.
“Our research shows that suburbs like Frankston North are not outliers and similar results can be found in each of the major cities,” Mr Peleg said.
“Busby in the western suburbs of Sydney is another example. This suburb consistently endured some of the highest gun violence rates across the city, yet it delivered growth above the median for Greater Sydney.”
In Sydney, eight of the Top 10 high-crime areas outperformed the market due to very strong demand from owner-occupiers and investors for affordable properties.
“Together, these high-crime Sydney suburbs delivered outstanding five-year growth of 87 per cent for houses and 65 per cent for units, outperforming the Sydney price growth benchmark,” he said.
“Brisbane and Gold Coast high-crime areas also typically outperformed the market.”
While price growth in Adelaide and Perth was below the local benchmark, high-crime areas undergoing significant gentrification delivered strong growth. For example, Prospect in Adelaide outperformed the local housing market with 26 per cent median price increase over the past five years.
The table below details the median price growth for the top-crime areas across each of the major capital cities, illustrating the absence of correlation between high crime and low median price growth.
“In summary, our research found affordable high-crime areas with significant gentrification are likely to produce strong median price growth. Whereas suburbs with high-crime and low-gentrification typically deliver growth below the city benchmark, such as in Osbourne Park, Perth,” Mr Peleg said.