Home prices are rising and many investors are asking, “How can I pick the next growth suburb so I can make good returns relatively quickly?” The answer to this question comes from sound market research, considering supply and demand and looking at how an area is growing and developing.
Finding a Growth Suburb
In order to find growth suburbs you need to conduct local market and council research, and be mindful of the market’s cycle. The three most common steps used by investors are as follows:
1. Review property reports and sales data – Reports and data are vital to spotting where property prices are growing, but don’t take these at face value. Rapid growth can be favourable, but you need to look at sales and cycle trends in detail and check historic records. Look for areas where prices are just starting to increase.
2. Supply and demand – Supply and demand is a driver of property prices. If demand is high and stock is low then property prices will increase. Look at real estate agency data, which show how many properties are for sale in a suburb. Also consider rental yields. If yields are growing, then it may show that an area is popular amongst renters. But, high property prices can effect results. To ensure this is not the case, compare property sales and rental yields.
3. Area growth and development – While figures give you a sound indication of where a suburb is headed, you also need to consider how the region is being developed. New shopping centres, amenities, and schools indicate that an area will continue to grow. Also consider infrastructure such as rail links to other areas. Just remember that plans can change so continually review local government plans.
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Written by eChoice