Property investment: tips on picking a growing suburb

19 Nov 2018

481362246-jpg-735x450.jpgFinding the perfect property is a challenge in itself, let alone making sure that you buy in the right suburb that’s going to be a smart investment for the future.

If you want to be one of those savvy property buyers who seem to always pick the up and coming suburbs, we’ve got some tips that could help get you started.

Sales data is your best friend
Online organisations offer property sales reports, either free or for purchase, and the research can prove invaluable in selecting your next investment.

The reports often show suburb price growth using monthly, yearly and 10-year comparisons, which can help you identify market peaks and troughs, as well as dormant suburbs that may be on the verge of a property price boom.

What to look for
We recommend looking at the number of days on the market, and particularly if this number is falling. Generally, fewer days on the market means that there is higher demand for the area.

A vacancy rate of below 3% generally means there is a shortage of rental supply in the area. A smaller percentage than this usually results in higher rent and higher property prices, and a higher percentage means rent reductions and falling property prices.

Also, keep an eye out for the number of auctions held in the area. If this figure is rising, it generally means that there is high demand. Real estate agents generally use auctions when there is a high demand to get multiple buyers to bid against each other to drive the ultimate price up.
 
Go for second best
Usually, the most popular suburbs have already gone through their price peak and boom period, and it could be another seven to 10 years before they achieve a similar cycle. This means that you could be investing top dollar for a slower return compared to if you invested in a less popular suburb.

Consider going for second best, because there’s a chance that you’ll be buying into a suburb that has yet to boom, which will provide you with the fruits of that return.

Remember supply and demand
Following the principle of supply and demand, the higher the availability of properties on the market, the more diluted your return on investment will be.

So, before you invest in an area, make sure you research property developments such as the amount of housing, high rises and units proposed for that area. Otherwise your property won’t be in demand in a few years, and you won’t see a good return on your investment.

Research planned infrastructure
Keep an eye out for planned developments and infrastructure in the area you’re looking to invest in. Key developments like bus and train stations, shopping centres, schools, sport and recreation and other amenities all bode well for your investment growth in the future.

It is this "lifestyle appeal" that can help drive up rental and buyer demand for your property in the future, as people see the area as a desirable place to live.
 
Hunting for your next investment? View all our current listings here and get in touch!

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