Home affordability, high property prices, and fluctuating rents are attracting plenty of media attention right now in Australia. The latest figures on house prices, mortgages, a number of first-time buyers and so on are feasted on by journalists as if this is an issue of recent origin.
If you’re an aspiring first-time homeowner or a property investor, the news might already be affecting your decision-making. Worry not! There are ways to spot growth areas. Here’s how you do it.
Look for areas currently experiencing gentrification. These are areas that had a poor reputation in the past, but is currently seeing homeowners from the middleclass and above changing the landscape and entire suburb community.
• Look at the affordable areas in any region you’re interested in;
• Assess the property’s price movement in the past two to three years;
• If prices have reducedprogressively, evaluate at the demographics. Asnowballing number of young residents with good income are a solid sign that the suburb beginning to gentrify;
• Look for newly built houses or renovated homes springing up in the area;
• Check out new cafes, commerce or retailers opening in the suburb.
Take advantage of surrounding areas. If you can’t presently finance a home right now, try checking out the best variable rate home loans available from housing loan providers. As an alternative, you may also buy into the area by checking the surrounding suburbs. This needs timing so evaluate the phase of the cycle of the local property market to maximize your chances of benefiting from the wave of growth.
Here are some tips for finding locations before the ripple of growth hits.
• Start by measuring property values by comparing the median prices of connecting suburbs;
• If you see more than a 5% variation, there’s a big chance that the suburb next door will be playing catch-up;
• Monitor the median price trends closely on a quarterly basis. Once you are sure that the cycle has kicked off, begin to look for properties within your financial capability that are as close to the growth as possible.
• Another good advice in the capitalcity suburban markets is to buy within 10km of the central business district (CBD), growth is virtually guaranteed to ripple this far out during a cycle.
Check the supply and demand. Another key driver of price growth is the supply versus demand ratio of properties in an area. If there’s no more area to build in the suburb yet demand keeps growing, chances are prices will climb.
Here are the top tips for finding high-demand, low-supply areas:
• Look for areas where the rental costsare rising. This shows that the area is popular among renters. When renters decide to be homeowners, they also prefer to buy in the same area they’re renting in;
• Check the demographics of people who aremoving into the area. Suburbs, where the median age is around 35, tend to gentrify faster since these demographics usually have Higher income and are therefore able to afford to rent or buy more expensive properties;
• Look for areas with asteadyrise inpopulation. Population alone isn’t enough to boostprices, but when mixed with other factors such as rising income and low supply, this is a great indication that prices will grow in the area.
There you have it! Do you know any other growth indicators not in this list? Share it with us.