With the rise of technology, property data seems more overwhelming than ever before, which ultimately presents a challenge for investors in every stage of their journey. How can they maximise resources and ultimately benefit from them over the long term?
CoreLogic Australia’s head of Australian research Eliza Owen said that property research involves more than crunching numbers. In fact, a critical part of studying the property landscape is looking at economic fundamentals such as employment, gross domestic product and the performance of various industries.
Ultimately, this information forms foundations for how the property market could move over a period of time, according to her.
Due to the many different factors to consider, data could understandably be confusing for most.
However, Ms Owen said that, in order to make smart decisions and maximise the use of data points, property investors simply must learn to contextualise data within an individual area over a long period of time.
By doing so, she was able to determine the great opportunities across Sydney, which is currently in recovery after experiencing continuous declines over the past months as a result of various financial and socioeconomic factors, including interest rates, the federal election and serviceability restrictions.
She explained: “A good example of that is, when Sydney investors ask, ‘Where should I buy?’, we look at growth patterns across Sydney and, essentially, we see the same growth pattern that will play out across the whole metropolitan area.”
“Yes, it’ll be to different extents, but what will happen, in general, is you’ll get the start of a cycle happening close towards the CBD and the eastern suburbs. Then, the growth or the decline, it will ripple out across the rest of the city.
“So, when we’ve got people saying, ‘Where should I buy? Where’s the next hot growth spot?’, I’d say, personally, my opinion is any foothold you can get in the Sydney metropolitan will enjoy the kind of flow over effects of whatever’s happening in the cycle at that time.”
When researching property investment, the expert advised investors to think long term.
Having a better understanding of how the “broader cycle performs” can definitely help them identify the best strategy that could help them maximise their wealth-creation potential – ultimately maximising the “power of data”.
Ms Owen reminded investors that even drastic declines may not be all bad news, as long as the area is able to maintain strong economic fundamentals.
“Keep across data over time and try to keep in mind that, if you see drastic kind of declines being reported in the news, that is merely a ‘point in time’ data point,” she said.
“Look at economic fundamentals of areas and consider not just the rise in employment or the growth of a particular industry, but really think about what kind of industry are you looking at. What is the likelihood that it’s going to have long-term gains for an area?”
In hindsight, this method of property research would have benefitted investors in the market during the mining boom, according to her.
“Think about the mining boom and bust – there’s this idea that this industry could be affected by a steel glut in China and, overnight, the dynamics of mining can totally change. Whereas, maybe a more long-term strong fundamental for a market is tourism, as Australia’s become more globalised and people are visiting more from overseas,” Ms Owen explained further.
“So we say, ‘What is it about Hobart that makes such an appealing tourist destination? Or along the coast of NSW?”
“Property research is almost more conceptual than just looking at every single data point of every single month. You need to just have that kind of confidence that, in the long term, there are areas that will have continued strong demand based on good fundamentals.”
At the end of the day, she advised investors to treat property data not as a singular, fixed point of reference but a guide that could be tailored individually to an investor.
“Yes, you use data and research to sort of guide your property decision, but at the end of the day, it’s such an individual thing as well. It’s about: what is your price point? Are you going to live in it? If you’re going to live in it, how mobile are you as a worker? If you’re going to rent it out, how close are you to the property to oversee maintenance?” Ms Owen concluded.
“It is a very individual journey. We just hope that the insights that we put out can help or inspire, and assist areas where more research and data analysis need to be done,” Ms Owen concluded.