• New data suggests high crime rates don’t slow down property price growth in Australia’s largest cities.
• In fact, the analysis from Riskwise suggests suburbs with high levels of crime actually outperform other areas in Sydney and Melbourne.
• While not directly correlated, it speaks to Australians prioritising other aspects, like location and affordability, over perceived safety per se.
• Visit Business Insider Australia’s homepage for more stories.

Only in Australia, where the pursuit of property has reached a fever pitch in recent years, could crime not pose a deterrent to would-be buyers.

In fact, recent data suggests that, paradoxically, high-crime rates are actually more akin to an accelerant to price growth.

Analysis by Riskwise Property Research found that suburbs that ranked highly in terms of crime in Sydney and Melbourne also tended to outperform the broader market.

“Our nationwide research actually found gentrifying suburbs with high crime typically deliver strong price growth and outperform the local benchmark,” CEO Doron Peleg said.

“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.”

Buyers agent Pete Wargent said the data showed that while buyers weren’t actively seeking out risky areas, there were other factors.

“Despite the stigma that’s typically attached to areas with crime issues, and the potential challenges that go with that over the short term, over a reasonable timeframe this has tended to be outweighed by the combined benefits of affordability, convenience of location, and gentrification, from a housing market performance perspective,” he said.

Given the fact that property prices have soared in both capitals over the last two decades, driven by high demand and inadequate supply, a lack of options would appear to be at play.

But without a choice, and with plenty of competition, buyers appear to be gritting their teeth and buying where they can.

However, it seems to be more complicated than that, with capital growth in high-crime areas largely trumping ‘safer’ neighbourhoods in the two cities — the only exception being Melbourne units.

“The ample supply of units in popular areas over Melbourne over this recent construction cycle has kept entry prices relatively affordable, and generally speaking apartment buyers have not needed to compromise so much by moving to high crime areas,” Wargent said.

Houses consistently beat the market

Comparing 10-year capital growth rates in the Harbour city, Risewise found that houses in all 10 high-crime areas outperformed Greater Sydney.

Even Granville, where price growth was relatively modest over the period, trumped Greater Sydney by 7%. Others like Liverpool, saw prices outrun the city’s average by almost 40% over the decade as buyers moved west.

“Sydney has a clear trend that these suburbs are all in the western part of the city, and only within the three statistical areas of Parramatta, South West and Inner South West which all enjoy good access to the CBD and have affordable prices,” Wargent said.

“This is due to a long-term trend of expansion, first to the Inner West with major price increases, and then further out.”

While following a similar trend, it’s clear it hasn’t been quite as pronounced in the Garden State.

In part, Wargent puts this down to the growth of Melbourne being more widespread, seeing eight out of 10 high-crime suburbs outperforming the rest of the city.

Sydney and Melbourne apartments diverged

When it came to units however, each city had a wildly different experience.

“While Sydney’s median unit prices are materially higher than Melbourne — $761,792 in Sydney versus $575,009 in Melbourne — units in high-crime areas are still relatively affordable compared to other areas in Sydney,” Wargent said.

He noted the research would show that investors shouldn’t ignore problem areas and “more objectively analyse financial risks”.

If you plan on living there, however, you might understandably have more pressing concerns.

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