Investors are always on the look-out for a solid return. With 14.30% growth over the year to June 10 according to CoreLogic, it’s hard to argue that Sydney isn’t a viable option for the savvy buyer. However, property investment isn’t all about million-dollar mansions. Whether you’re new to the real estate market or looking to purchase a home to supplement your income, identifying the next boom suburb is part of the game.
So what should you keep an eye out for? Here are some guidelines to help you pick a growing area.
Cold, hard facts
Statistics and reports are easily accessible, but it’s how you interpret this data that counts. Investing in a home is a sizeable financial commitment, so you want to make sure that you’re getting the most from your investment. Not to mention that it can help you stay within your limits when applying for a home loan. For this reason, it’s a good idea to compare sales and price trends for a number of different areas.
Cyclical trends are often a better indicator of an area’s performance than taking prices at face value. For instance, a suburb may be in the midst of a boom period now, but a closer look could reveal that prices have reached their peak or are even on their way down again. What’s more, it may not experience the same level of growth for quite some time.
Similarly, troughs could suggest that an area is ripe for development, particularly in a booming city like Sydney. Real estate tends to roller coaster up and down over a period of time, and a dwindling area may be poised on the verge of a comeback.
Keep an eye on the number of property listings available in a particular location, as well, and how long they are on the market. A suburb with very few listings could suggest that the market is competitive, with buyers snapping up available homes quickly – this can put upward pressure on prices over time. Border Bank’s free Property Insights App can be an invaluable tool throughout this process, allowing you to compare and analyse current market data with just the click of a button.
Get a feel for the area
The promise of a suburb isn’t just reflected in the data – it can often be a matter of getting a sense of what’s happening in the surrounding area. Large-scale developments and improving infrastructure (such as new public rail links, shopping centres, schools and multi-unit complexes) can be a sign of future growth, though it pays to be cautious when considering these factors: Planned construction doesn’t always go ahead as scheduled.
What’s more, an influx of new restaurants, cafes and cultural venues may indicate gentrification in a particular suburb. Younger residents with a higher disposable income are typically willing to pay more in rent and can afford pricier properties, a promising sign for high yield opportunities.
Once you’ve got a grasp on these broad principles, you can go into the search for your investment well equipped and ready. Our team of lending professionals at Border Bank can provide all the guidance you need about financing your purchase.