Creating Value Requires Money

In Australia, as in many other countries, creating value requires some form of input. One common way to achieve this is through people—who generally work in exchange for rewards. One of the most common rewards is money.

Now, let's focus on the specific context of Australian suburbs. People usually want to move to places that offer something they value. In Australia, this value is often created by government bodies such as federal, state, and local governments. Typically, people move first, and then value is developed. The rate of this development depends on available funds, and ideally, what is built aligns with the majority’s demands.

To avoid spending days analysing each individual suburb, I'm going to simplify the process significantly. This will help me identify suburbs where I'd like to live, based on my own values and lifestyle.

I have many examples but here are two of them. First, I'm looking at suburbs with the potential to generate significant contributions from ratepayers. In other words, the more properties there are within a local government area (LGA), the more rates they can collect. It's also important to consider the area's size to calculate how much money they have per square meter. This can be simply done by dividing area and the population of the suburb.

Secondly, I’m considering suburbs with a meaningful number of residents because I am a firm believer that larger population eventually leads to tangible benefits such as receiving bigger infrastructure budget.

Supply and Demand

Each suburb has limited supply unless new ones are built. I am going to ignore new developments just to simplify things (and it might be awhile until they become livable). One useful metric is median rental price and the amount of income spent on rent. Higher median rental price vs NSW average indicates above-average demand.

I personally use the rental price data of the suburbs I previously lived in as a guidance to filter out suburbs that I am likely not wanting to live in. This will really depend on people. For example, I have 3 kids and I value good public schools because I would like to avoid paying for private schools if possible. In NSW, the median age is 39. This might be a jump but I personally take this as an indicator that rental prices near where good schools might be higher than others.

I won't explain my full logic but one of it is because the age group generally have kids unless they are dedicated Dual Income No Kids couple. Thus, creating competition which leads to increased rental price. Based on my personal experience, the area I tend to look at have ranges above $800. There are definitely options I might like below that but because of my laziness and due to lack of time, I use the $800 as a indication to quickly filter out suburbs I might not want to live in. WARNING: this logic might be very flawed and is a product of my laziness.