Here are some factors that play a key role in property investing. How much research and information has been gathered in these areas is critical. Dealing with specialists property advisors help you ensure that you are investing in the right areas and the right properties for you. You must look at:
Where are people moving and why? Australia is set to see unprecedented population growth over the coming 40 years. By 2050 the Australian Government expects to be hosting a population of 36 million. Where are these extra people going to move? They will not be spreading evenly across Australia; that is for sure. South East Queensland and Melbourne will be seeing the greatest percentage growth, followed by Sydney and Perth. Looking at just the macro growth influences, you will be best positioned if you are in one of these markets.
Drill down into this information to make the best decisions as to the specific areas (micro influences). Supply and Demand is a simple yet complex beast. Simple because when there are more buyers than sellers, then prices will rise. Picking the right spot at the right time is the complex part.
What industries are driving the local economy? Any area that is a “one trick pony is susceptible to severe market swings. Having a solid base of employment options is key to a stable local economy. Hospitals, education facilities, business parks, manufacturing, mining, defence, tourism, retail, local industry etc what is there now and what growth potential is there?
A great example of this is the NorWest Business Park in Sydney. This mixed use commercial precinct changed the face of the North-West corridor of Sydney, increasing property prices dramatically, providing thousands of jobs and boosting the local economy. This is happening all over Australia and a well timed investment can put you well ahead of the investment curve.
Historical growth gives a strong indication of where it is heading. Look at the last 3 years and the last 10 years growth. As an investment, do not concern yourself about the latest newspaper headlines, just the “big picture“.
What drives capital growth? Population growth, employment growth and an increase in local facilities are three major factors. Land is the asset that increases in value but that does not mean that the largest block of land wins the growth race. For $450,000 you can get a detached house in the outer ring of the city, a townhouse in the middle ring or a 1 or 2 bed apartment close to the CBD. The simple laws of supply and demand will dictate the capital growth. If more people want a CBD apartment and there is not adequate supply, prices will rise. If the Government puts a boundary on the outward city growth, a block of land will be a premium asset.
Access to facilities, future growth projects. Where is money being spent? New schools, transport hubs, employment precincts, road expansions, new supermarkets and shopping centres all add to the value of an area.
The most important factors for residents are the convenience of the local facilities. Demographics show us that for CBD apartments, residents will most likely work in the city and spend a lot of time and money on shopping and eating out. In outer ring houses, the tenants want a secure environment for their children, access to schools and local shopping facilities.