How to correctly gauge property growth of an area

Category: Buy | How To | Invest

Have you ever wondered what it is that causes property prices to increase or how best to determine growth of an area? Today we’re going to take a look at a few different ways to assess whether an area is ripe for purchase and how to evaluate where to invest your hard earned cash for the best returns.

Look at sales data

As you look into an area for potential investment opportunities, it’s extremely important that you seek property sales reports about the area. Property reports provide you with information such as the median house price, capital growth rates, latest sales results and much more. These reports can be found on online and some companies have newsletters that you can subscribe to so you can keep up to date.

It could be in your interest to have a look at the Australian Bureau of Statistics to get a general idea of the real estate market as it will allow you to compare areas you’re considering to state averages. This allows you a clearer picture of what kind of growth to expect and can help you determine whether an area has already hit its current peak.

Developments in infrastructure

It’s no secret that infrastructure development is remarkably good for capital growth in real estate. Properties located near schools, road networks, train stations, shopping centres and other amenities improve rental desirability and lifestyle appeal of an area. When you’re searching for a suburb to invest in, look for planned infrastructure that can impact the future property sales prices of the area. You can find this out at the local council and government transport websites.

Employment

Local employment is one of the biggest drivers in any property market. People will generally gravitate towards areas of opportunity. We see this everywhere – think back to our mining boom a few years ago and the Olympics before that. The creation of thousands of job opportunities naturally increases the demand of these areas and places pressure on the property market to increase prices.

Job growth is, in most cases, proportionate to infrastructure developments especially those that can produce sustainable employment.

Supply and Demand

The ratio between supply and demand is a key driver of property growth. If the area has no more capacity to build but demands keep on growing – prices can only go one way. The best ways to monitor this is to look into areas where there is a consistent rise in rental yield and population growth. Population growth can be caused by a number of factors so it can be a misleading indicator but in conjunction with other traits of property growth it can assist in giving you a more complete picture on what to expect in the future.

In the end there is no sure-fire way to guarantee growth but using the above indicators and keeping on top of your research will certainly help you to determine where to be looking and increase your ability to succeed in property investment.

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