If you’re thinking of investing in residential property, Australia represents one of the best markets in the world—as long as you do your research and are as careful as possible when choosing the right area to invest in. Yet, there is much more to pay attention to than simply the physical location in property investment. You need to take other factors into consideration before you pull the trigger.
When your investment strategy is sound, you will be able to maximise your returns and watch your property investment portfolio value appreciate. You’ll be able to get quality tenants to help you pay expenses and give you a regular source of investment income for building and growing your wealth.
However, this will not be the story everywhere. If you don’t pay attention, you could see your property’s value stagnate or even depreciate and find it very difficult to attract buyers or tenants. With so much on the line, how do you pick the right locations and know which ones have great potential for property growth?
Lower Crime Statistics
Safety is one of the things property buyers and tenants consider when choosing an area they want to live in. Therefore, it’s important to include it as part of your strategy as well. Crime statistics have been proven to impact property values in a given location. For example, Professor Chris Eves, a property economist at Queensland University of Technology, oversaw a long-term study that looked at crime rates and how property values fluctuated in nearby communities. He found out that assault and robbery cases would be far more likely to impact value in a higher-end community, whilst theft and burglary would dampen property values in mid-range suburbs.
The basic rule is people will prefer to reside in locations where they’ll feel safer. If crime is historically rampant in a given location, chances are its potential for future property growth will be negatively affected.
Solid Supporting Infrastructure
Another factor you should look at is the infrastructure that’s available in the location you’re considering. Having quality infrastructure (e.g. power lines, roads, transportation systems) is a good sign that an area could see more demand—people will naturally gravitate towards a location that offers more convenience.
To emphasise this point, studies have shown that a suburb with a good train station can often command house values that are several percentage points higher than a suburb without nearby transportation options. Most people want the capability to work near where they live and the convenience of having quality public facilities. As such, having solid infrastructure is a good selling point when attracting buyers or tenants.
Growth in Business and Employment Opportunities
Having a thriving or growing business and employment market is another factor that could drive property values and growth upward. Aside from safety and convenience, people will want to reside in a location where they can comfortably work or set up a business. Thus, having more business or employment opportunities will create more demand in the long run as there is no shortage of people who want to earn a living.
Do your research when choosing a location for your investment property and consider trends related to business and employment in the local community such as the number of new jobs being created and if big businesses have set up shop in the area. It has been proven that sustained job availability can lead to a property boom, which is exactly what happened in Melbourne and Hobart in 2013 and 2016, respectively.
More Planned Future Developments
Research to know if there are plenty of planned or approved infrastructure projects or improvements in the pipeline for the next few years. This could be a good indicator that an area will be developed further, potentially leading to sustained demand in the near future.
Developments can be in the form of new schools, hospitals, freeways, parks, and shopping centres—all of which can generate more demand and business or employment opportunities, leading to elevated property prices within the vicinity. Having more planned developments also means a location can support potential capital growth.
Population and Favourable Local Market Trends
Analyse a local area’s population statistics (e.g. year-by-year growth) to have a better idea of its future performance in terms of demand. An upward trend in population usually means more property demand can be expected. This increases housing and apartment values, especially if there’s a shortage of available land or housing.
It’s also important to look at local market trends and statistics including the days on market figure (how long a property has been on the market), prices in the past few years (especially for properties similar to your own), and vacancy rates. Historical analysis can give you a better idea of how well a location has performed in terms of property value, demand, and growth, and what to expect in the coming months or years.
Research should always be an integral part of your property investment strategy, and it is something we at Calla Property specialise in. Through our research methodology, Calla Property Insights, and our match criteria, Calla Property Evaluation, we’ll select the right property and make sure it fits your investment goals. This is a free service, and we encourage you to contact us today so we can start helping you build your wealth and dreams through property investment.
Disclaimer: No part of the information or calculations here are intended as advice. This is for general information purposes only.