Australia's public housing program began shortly after World War II to address the housing shortage for it's returning soldiers and their families. In recent years public housing estates have turned into unloved, low socio-economic areas for the disadvantaged. As more and more public housing stock makes it's way into the property market, we explore whether these places are good long-term investments or as a principal place of residence.
For many first home buyers looking to enter the property market, public housing are affordable and can be highly desirable, particularly in areas that have undergone, or are expecting to experience council gentrification and public infrastructure spending.
Areas with a high concentration of public housing estates don't always make terrible investments despite the negative stigma attached to these suburbs. Areas such as Collingwood, Braybrook and Fitzroy for example have a high concentration of public housing (well over 15 per cent), yet they continue to experience strong growth and buyer demand because of their close proximity to Melbourne's CBD.
In New South Wales, housing commission located in areas such as Mount Druitt, Minto, Claymore and Macquarie Fields tend to fluctuate more in price. When the Sydney market boomed in 2015, many of these areas experienced strong growth and buyer demand, but this was short lived due to the negative stigmatisation of these areas - stigmatisation that can last for a very long time.
When it comes to public housing areas, make sure you do your research of the suburb. Not all public housing are bad investments, and not all areas have high crime rates. The majority of people just want to live, raise a family, work and get on with life.
Often areas with a bad reputation are cheaper for a reason, they may be less aesthetically desirable or experience higher crimes. But just because an area has this reputation in the past, it doesn't mean that it will continue to be like this. In Western Sydney, Blacktown and Minto and certain parts of Camden had pockets of public housing and were less than desirable at the time. However government gentrification projects have seen these suburbs transform into safe and desirable areas to live and invest in.
Before you buy, consider the suburb you'd like to live in. Visit as many open homes as you can, get to know and build a rapport with the local real estate agent who best know the area.
At the next open home, ask them about the suburb and street that you looked at before. And while you're there, speak to anyone you come across that lives in that area.
Is flooding, bush fire or steep slopes an issue to avoid?
Are there any planned council or government gentrification projects for the area?
What roads have the most traffic and congestion?
After speaking to a few local agents in this manner, you will be will supplied with a wealth of information and you'll make better decisions on where to buy next.
Beware of the Property's Valuation
Buying in or near public housing estates could see your property discounted by as much as 10 per cent, which is great if you're short on cash and you've been saving to get enough of a deposit for a new home. It's not so great when it comes time to sell up, or later on when you want to refinance your home to access the additional equity.
If you would like help with getting a home loan or a property investment loan, book a free appointment with our mortgage brokers to see how we can help. In the second part of our article on public housing, we will discuss whether public housing make good investments.