They say the holy grail of property investing is buying into a suburb at the right time. So how do you identify areas poised for growth, before the market peaks? Here are some general things to consider.
Gentrification happens when new waves of homeowners move in and change the landscape of suburbs for the better.
Take a drive through affordable neighbourhoods, including those that previously may not have had the best reputations, and you may spot clues about whether they are on their way to being gentrified. Newly opened shops and cafes is a good sign, as is a high number of home renovations.
Research whether property prices have grown in the past few years and then look at the demographics of people who live there. Good indications include the local population getting younger, and more affluent households.
If you’ve missed the boat and a suburb is already booming, consider the surrounding areas for a possible ripple effect.
Having a major infrastructure project underway is a sign an area may be set to boom due to new employment opportunities. This could be upgraded transport links, a new shopping centre, or anything that boosts the local economy.
Supply and demand
A key driver of price growth is having more demand for properties than available supply. Typical indicators of an area experiencing high demand versus supply include:
- Days on market – properties are getting sold quicker and on the market for a shorter period of time.
- Auctions – when sellers go the auction route, rather than listing for sale, it can be because real estate agents believe there’s demand in the area and the competition may drive prices up.
- Rental yields (how much income/rent a property could get, as a proportion of its value) - rising rental yields indicates an area is popular among renters.
- Vacancy rates – falling rental vacancy rates means a growing demand for rental accommodation in the area.
In addition to finding a suburb that’s about to boom, here are some general tips on location features that could boost the outcome of your investment property:
- Walking distance to shops, parks, cafes and restaurants.
- Good access to public transport.
- Close location to schools, especially good public schools.
- Proximity to amenities like public pools, gyms, bike trails, dog parks and walking tracks.
- Low crime rate.
- Clean streets and attractive landscaping.
Found the right property for your investment goals?
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This information is general only and should not be taken as advice. If you require advice we recommend you speak to an expert.
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