Price per square metre a crucial tool for any investor

“[Price per square metre] is a very effective tool to identify opportunities and anomalies in the market, helping investors to better assess the risks associated with suburbs and individual properties (particularly units),” Mr Peleg said.

Firstly, Mr Peleg says to identify areas with a high price per square metre, as his research dictates these locations have a lower level risk and should deliver a stronger capital growth in the long-term, especially for houses.

Next, suburbs within those areas with low price per square metre compared to neighbouring suburbs need to be identified, which Mr Peleg says risk is reduced and increases the chance for solid capital growth.

“Investors who successfully identified such opportunities five years ago, today own [properties] that have significantly outperformed the market,” Mr Peleg said.

“A prime example is a unit in Freshwater; with a price per square metre of $7,516, it was significantly cheaper than the nearby Curl Curl, with a price per square metre of $10,000.

“As a result, property prices in Freshwater have increased by 63.5 per cent in comparison to 47.5 per cent in Curl Curl.”

The methodology has also revealed a number of “animalities” in the current market. Mr Peleg provides the example of Glebe and Annandale, which has median unit prices of $808,000 and $875,000, a difference in price of 7.5 per cent.

“However, the price per square meter in Glebe is only $9,280, where the price in Annandale is $12,873 – effectively a 38 per cent price difference,” Mr Peleg said.

Another example given by Mr Peleg is Rose Bay, as its median unit price of $1,065,000 is on a par to that of Dover Heights and North Bondi, yet the price per square metre in Rose Bay is $11,100, while Dover Heights and North Bondi have prices per square metre of over $13,000, a difference of at least 17 per cent.

One of the riskiest suburbs to consider, price per square metre and otherwise.

“Zetland has a very large number of units in the pipeline, and moreover, the price per square metre is $11,658 – very expensive, especially when you consider it is around 10 per cent more expensive than the affluent suburb of Double Bay,” warns Mr Peleg.

Data presented exclusively for Smart Property Investment reveals the top 10 most expensive and most affordable suburbs across Australia for both units and houses:

Units – Top 10 most expensive

Units – Expensive suburbs outside of NSW

Units – Top 10 most expensive

Units – Expensive suburbs outside of NSW

Houses – Most affordable located within 20 kilometres from a CBD