When it comes to investing in property in Australia, location is everything. This may seem obvious for anyone looking to buy property, but it is doubly important for investors looking to maximise their long-term capital growth.
How Do I Identify The Best Suburbs To Invest In?
• Thoroughly research the area before you look at a property – A decision made in haste is regretted at leisure, so spend time identifying your target area.
If you can drive there, go and walk the streets – or if you’re looking interstate do a Google street view virtual tour to get a feel for the area.
• City properties over country – Country property is often cheaper than those in the city, and can have attractive price growth over the long term. But this can come at a cost. Property outside of major population centres can be very hard to sell, with higher costs due to a smaller, less competitive market.
Finding a good quality long term tenant for a country property is often more difficult due to the smaller rental pool with higher rental management costs. And with the population base tied to a far less diversified economic base, if the industry of the region hits a bump, prices can turn sharply for the worse for a prolonged period.
• Gentrification – Look for areas that may be gentrifying, or are on the edge of more expensive areas. Areas that are historically more expensive but are seeing price weakness may be a good option if the reason for the weakness is only short term in nature.
• Take note of social, cultural and attractions – When doing your research, identifying social, cultural and lifestyle attractions in a suburb will help you differentiate between locations. Buyers favour these attractions and their long-term capital worth should never be underestimated.
• Take note of each and every positive element of a location – How close it is to shops, parks, schools, CBDs, transport etc
• Track infrastructure – Keep track of developing infrastructure in an area and how this might boost the value of a property in the future.
• Talk to local councils – Chat with local councils in potential locations and find out what is being planned in the area. Anything from infrastructure to new schools, shops and road upgrades might add value to a location in the long term.
• Explore neighbouring suburbs – Once you have identified where you might want to buy a property, take a look at the neighbouring suburbs. If somewhere is buzzing, then neighbouring suburbs are usually the next in line for growth.
Tools For Identifying The Best Suburbs To Invest In
There is a wealth of data and information out there that can help inform your decision of where to invest. Here are some that are very useful:
• Residex – Residex is an award-winning property data resource for banking and finance industries, property professionals, investors and homeowners providing market and suburb reports, predictions, rent reports and much more.
• PropertyDATA.com.au – PropertyDATA provides analytical data collected by the real estate institutes and is widely trusted by banks, real estate agents, valuers and investors alike; an excellent research tool.
• JLL – JLL provides property research and market reports for residential, industrial and commercial properties.
• Real estate institutes – Each state in Australia has its own real estate institute which provides market commentary as well as median sale prices and other market data.
Search “real estate institute” and your state and to find the information you need. This is particularly helpful when looking to diversify your investment portfolio with properties in different cities.
• Realestate.com.au – Here there is a a great ‘Invest‘ tab that can provides lots of valuable data on the top performing suburbs in Australia.
• Census – Census data is a great resource for looking into how suburbs and their population are changing and growing. Take note of the type of people living there, their incomes, their age and professions and how this might influence your choice. The “QuickStats” page is great for fast information.
• Australian Bureau of Statistics – The ABS has loads of useful data on population trends including migration, regional data, births, deaths and demographics.
• DSRdata – This is a great resource for quickly researching the typical value for houses or units for a particular suburb, and the demand to supply ratio, which is an indicator of capital growth potential.
• Onthehouse.com.au – This site provides information on specific houses, including sale and rental history, as well as comparisons with neighbouring properties.
• Propertyvalue.com.au – This is an excellent resource to find out the basic details of a suburb – such as the median property price, median rent, median rental yield, plus information on properties sold in the last 12 months.
• SQM – Yet another research tools for exploring property data, vacancy rates, asking prices, total property listings, and sale records.