What is the ripple effect and how will it affect my home purchase?

Many buyers often focus on a singular location or suburb as the ideal location for their next home. However sometimes it pays to consider the ‘ripple effect’.

The ripple effect refers to a situation where buyers might be priced out of an area and will therefore look further afield to nearby streets or suburbs, which more closely match their budgets. In turn this pushes up real estate prices in those neighbourhoods, creating a ‘ripple effect’.

The ripple effect is probably more common in suburbs that are on the rise and/or on the edge of more popular areas. Other factors that can create this effect include proximity to public transport, schools, shopping centres, major developments, while industry growth (such as mining in larger regional towns) can also contribute. These factors foster the popularity of the area with home buyers and in turn help underpin property values.